Turning Carbon Emissions Into Fuel: How Standard Carbon Is Rethinking Clean Energy | Ep. 112 [Natan Shahar]

Can carbon emissions become part of the solution to the world's growing energy challenges? On this episode of Industry Ignited, host Dr. Leeanne Aguilar welcomes Natan Shahar, Founder and Chief Strategy Officer of Standard Carbon, for an insightful conversation about carbon capture, renewable energy, and the technologies reshaping industrial decarbonization. Natan explains how his experience working with aging building infrastructure inspired him to explore a different approach to reducing emissions. Instead of requiring companies to replace expensive boilers, industrial equipment, and heating systems, Standard Carbon is developing a process that captures carbon dioxide and combines it with hydrogen to produce natural gas that can be used within existing energy networks. He also shares how an idea inspired by fuel production for missions to Mars helped spark a technology designed to address real-world energy challenges.

Beyond the technology, Dr. Leeanne and Natan examine the economic and operational realities of transitioning to cleaner energy, including the limitations of electrification, the importance of affordable renewable electricity, and the growing demand for reliable energy storage. They discuss how converting renewable power into fuel could help industries maintain operations while reducing dependence on fossil fuels, as well as the leadership challenges of transforming an engineering concept into a commercial business. From carbon regulations and energy independence to innovation and entrepreneurship, this conversation offers valuable perspectives for business leaders, engineers, manufacturers, and anyone interested in the future of sustainable industry. Tune in to Industry Ignited and discover why the next major breakthrough in clean energy may come from finding new value in the infrastructure and resources we already have.

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Dr. Leeanne Aguilar 0:06

What if the path to decarbonization is not tearing out the infrastructure we already have, but transforming the carbon coming out of it into the fuel we still need? Welcome to Industry Ignited. I'm Dr. Leanne Aguilar. And today I'm joined by Natan Shahar, founder and chief strategy officer of Standard Carbon. Natan, welcome to the show.

SPEAKER_02 0:27

Thank you so much for having me. I appreciate the opportunity to talk today.

Dr. Leeanne Aguilar 0:31

Yeah, I'm looking forward to learning all about your efforts. Now, you started your career solving energy and engineering challenges for New York City building owners. What did that world teach you about the reality of decarbonizing older complex infrastructure?

SPEAKER_02 0:47

Well, just that when you come across very old systems, a lot of the pieces that might be taken for granted with new construction simply don't exist. And it's in a very harsh weather environment. So just to give you an image, New York City, many of the boiler rooms, you'll go into a 100-year-old building or a building that's more than 100 years old, and you'll see a plaque on the wall that'll say big bronze plaque, Webster Boiler Company 1903 or 1911, right there. And next to it will be this enormous cast iron boiler the size of an already double sort of ceiling-size room. And this boiler plant was initially designed to run on coal. And you can envision 100 years ago people shoveling coal into these boilers on a constant basis in order to create steam to heat up the building. And this was state-of-the-art heating technology in the year 1900 or 1910 or even 1920. This was considered a luxury and very advanced compared to what was going on everywhere else in the world at the time, because New York City was among the most advanced and modern in a way it tackled heating and buildings in winter and everything else at that time. Over the years, these boilers have been retrofitted from coal first to run on oil, and now very recently in the past approximately 50 years, they've been retrofitted to run on natural gas. The key piece that is so unique about this is the cost of the heating system, the boiler, the steam piping, the radiators, the whole system that provides heat to a very large building was paid for lifetimes ago, not decades ago, not the previous owner. Literally, your great-grandparents, when they built the building and bought the building, their mortgage paid off the cost of building that heating infrastructure. And so when the building was then resold over the past century, the vast majority of the owners had a cost that just reflected sort of market conditions. It didn't reflect the need to build an entirely new system from scratch because all of those major investments have been completely paid for, as I said, in previous lifetimes. Right. So when you go in and you say, oh well, this heating system is horribly inefficient. And we don't build new buildings like this, new houses, new construction like this ever anymore. We should just rip it out and putting something entirely new. You're taking on a Titanic investment, even if it was easy technically to do, it's just introducing a level of cost into the real estate underwriting system that is highly abnormal because existing buildings have mortgages and financing and pricing based off of the expectation of what an existing building should cost. And it could be that if you're ripping out and replacing the entire heating system in a place like New York City where you have a very harsh winter, so you need a very powerful heating system. It's I always say one of the biggest things that can be a challenge for a lot of the people in the energy, energy engineering industry to understand is there are those that live in locations with weather and there are those that don't. San Francisco and Los Angeles, um, if you don't have heat, it's uncomfortable, but you won't die. You just need to put on a sweater in the winter. But in Chicago or New York City, if you don't have heat in the winter, you'll freeze to death. So it's not a luxury. It is what makes these locations habitable or not. So that just emphasizes the fact that if you're going to replace the heating system in a building in a place like New York City, then you are adding costs to that property that simply were not envisioned when it was underwritten for a mortgage by the current owner or even the previous owner. And so even starting that discussion with a bank, if you want to do it, let's say you have an owner that they say, Yeah, I want to do this, I want to completely change it out. The bank's gonna look at the financials and say, Well, this is not a retro fit, this is new construction. So now you're gonna have to go to our new construction division, and it's an entirely different set of rules and discussions. It's very hard, it's just very hard to do financially. Forget about technically. Technically, there's a whole other host of challenges.

Dr. Leeanne Aguilar 5:14

Yeah, and you're talking about huge buildings. I mean, multi-story, multi-multi-story buildings. Uh yeah, so it's no small feat, no small project. And so going for that kind of funding is gonna be a challenge if if they can't really justify how they're gonna get at the return on investment.

SPEAKER_02 5:29

Entire state building was finished uh during the Great Depression in the 1930s, and it runs 100% on low-pressure steam to circulated through the entire property. And it's was completely state of the art at its time, almost 100 years ago. And uh to go and replace all of the steam heating and sort of steam circulation systems with something else is a undertaking that would cost hundreds of millions, if not even billions of dollars. I recently I spoke to the head engineer and facilities manager of one of the largest universities in New York City, and he told me he had a $1.4 billion budget allocated to uh decarbonize their essentially heating, heating and cooling system. And uh he said, even with that budget, there's enormous debate internally about whether they should do it because of the technical and operational challenges, putting aside the financial issues. So just give you an idea of the scale, this is not simple.

Dr. Leeanne Aguilar 6:28

Even when they have a budget, they're considering.

SPEAKER_02 6:30

Yeah, this is a private university that has money.

Dr. Leeanne Aguilar 6:32

This is the private university that has all the money and they don't want it. Right. Yeah, just because of the challenge of the undertaking. So you described local law ninety-seven as a turning point. Suddenly, you've described local law ninety-seven as a turning point. Suddenly, landlords were facing major carbon penalties or costly unproven retrofits. What did you see uh in that moment that others were missing?

SPEAKER_02 6:55

So local 97 is the most aggressive decarbonization mandate on the planet. But to put it, the context is important. So it's essentially a price on uh carbon dioxide emissions, and the price is $268 a ton uh of CO2 emitted from a building. Put that in context, that's more than three times the average price for carbon emissions in the European Union cap and trade market. New York City decided in 2019 they wanted to be not just on par or slightly better than France or Germany, they wanted to be three times more aggressive than what France and Germany were already in many respects, in many respects, struggling to do. And these are sovereign countries, not just a single city. So that should give some understanding of just how much money we're talking about. It's not a cost that a building can ignore. They have to take this seriously. And so what that means is if you if you have a building with a boiler that now is going to see the cost of operating that boiler essentially increase compared to what it was without this law, they either have to find a way to replace their heating system to avoid the law, or they have to find a way to pass the cost on to the tenants of the building. Both are extremely hard to do, crushingly hard to do. So I I said jokingly to property owners when they asked me when the law was passed, because there was this grace period. The law was passed in 2019, it didn't come into effect until 2025. So they said, What do we do? I said, Look, this is very intense, this regulation. There's a good chance it'll be repealed or watered down. It's hard to see this making it all the way through. I said, But if it does, then you should sell all your buildings now because it's gonna be really difficult for you to underwrite and sell and conduct business the way you have in real estate in New York City after this law comes into effect. And they said, you know, I live in my conduct, so give me a solution. That's not gonna work. I'm not moving. This was before COVID when they all moved to Miami, right? So so that so that's when I started thinking, okay, what can be done. And uh I was, by coincidence at the time, reading a book about how NASA could run Mars missions more cost-effectively. And uh what the book discussed was that you can use the atmosphere of Mars, which happens to be carbon dioxide, CO2, to create fuel, to create rocket fuel on Mars for the return journey to Earth. And the idea there is that, well, if you can produce all the rocket fuel you need on Mars, then it's a lot cheaper and easier to get back to Earth because you don't have to bring as much material physically with you to Mars. You can cut what you need to bring with you dramatically. So the economics of the mission gets simpler. I was totally unfamiliar with this chemical process until I read this book. But what I read, I said, well, if you can do it on Mars, I'm guessing it's a lot easier to do that in a chimney in a boiler room than it is to do it on Mars. So what can be done? Maybe we can do this with a boiler. And so I did more research and I discovered, in fact, it wasn't a new idea. It was a very old idea that you can essentially reverse the combustion process. You can take carbon dioxide and um hydrogen, combine them in a reactor over a catalyst, and produce methane, which is natural gas, which is what feeds the boiler to begin with. So theoretically, you could have a closed loop of a boiler burning natural gas to produce heat and then recycling the carbon dioxide back into natural gas to use when it's needed. The question becomes then, well, how can this be done cost-effectively? How can this be done cheaper than the alternatives? The piece in that equation that's expensive is the hydrogen. So creating hydrogen in a clean way via electrolysis, where essentially you um split water using electricity into hydrogen and oxygen, consumes a titanic amount of electricity. So, where does the power come from to do this in a way that's cost effective? So, what what I did was I actually looked at the power market in New York City. So electricity is the fastest moving commodity in the world. Every five minutes in New York State and in many parts of North America and Europe, every five minutes you get a new price for electricity. And that's how they balance supply and demand, is they're constantly pricing it in that way. And so what that means is a lot of the time you get very cheap or even zero or even negative pricing. There are times where they pay you to take electricity off the grid because that's just how they balance supply and demand to make sure that the grid is stable with the exact amount of electricity it needs at all times. So I I went on the uh for zone J, which is New York City of New York State, I looked at the the market for electricity in the year 2019. You know, what was the pricing? And I was surprised in Manhattan, in Times Square, in the heart of New York City, almost 20% of the time, electricity was close to zero in price. Really? And I was shocked to say, how could this be? And I looked for a physical reason, and it turns out there was a very good one. The nuclear power plant was still operating at that time since it's been closed. And nuclear power cannot be efficiently ramped down. So at two o'clock in the morning, it produces power that nobody wants. And so it just dumps that power on the grid and it dumps it very cheaply because it's easier for the power plant to continue to operate and sell the electricity cheaply than to turn it off because it's a sure piece of nuclear infrastructure. And that created this opportunity. And so then I started looking at other use cases, and I realized with renewables, you have this in an extreme fashion. So in markets where you have heavy wind or solar penetration, this dynamic of cheap to negatively priced power increases exponentially. Uh, and so then for me, it just became a process of okay, well, you have to design a system where the hydrogen is only produced using this cheap power. And if I can solve for that, then I can capture the CO2, because that's easy. That's very established in technology. Capture the CO2, combine it with the hydrogen to produce natural gas, and then just recycle the natural gas back to the boiler when it's needed, or inject it into the pipeline network. Either way. And that was that was the genesis of the whole thing.

Dr. Leeanne Aguilar 13:26

Wow. So a book, yeah, ironically, right. Yeah, a book sparked the idea, and you're like, huh, let's, you know, um, see if it could work on Earth and found that it it could and that it would solve a lot of problems. So before standard carbon, you had experience spanning energy audits, sustainability projects, environmental engineering, and even microbial fuel cell research. Looking back, how did those different threads prepare you to build this company?

SPEAKER_02 13:51

Yeah, uh, so when I was in school, I did my bachelor's in environmental engineering and it was focused on water process, wastewater treatment, chemical process technologies. But the circumstances of when I uh graduated were such that I wasn't geographically located in the right place. I was in New York City at the time where there weren't a lot of work in that field, especially in 2011 during the sort of the bottom of the Great Recession, the pretty lousy job market to begin with. So I ended up working in energy efficiency for real estate for buildings, and then I went on to get my license as a mechanical engineer for HVAC. My whole focus was on services for real estate. So when I uh had to, so when I started thinking about this idea, I really was combining my professional experience with combined heat and power systems and uh all different kinds of heating and cooling and HVAC systems for buildings with my undergraduate and then actually master's work in really chemical engineering technologies and the research, and that's with the microfield fuel cell piece. So I had the kind of academic background to explore new uh ideas and new approaches to this, even though professionally I had been very sort of siloed at that point into just typical HVAC work.

Dr. Leeanne Aguilar 15:12

You know, so you knew how to take this idea that you had and start to take it from concept into actual um, I guess, working technology. Right.

SPEAKER_02 15:21

I guess you could say, you know, what separated me from a lot of the other engineers doing the same kind of work was I had a chemical engineering background as opposed to mechanical. So what when I saw boilers, I was thinking about the chemistry inside the flue gas and the different constituents and how those pieces come together as opposed to uh thinking about heat and airflow, which is more how the mechanical engineer would look at it. It's just it's funny, you know, engineers are so siloed, but we as a result of that, we look at the same piece of hardware with totally different eyes.

Dr. Leeanne Aguilar 15:52

Right, exactly, different perspectives and different components, even or right, different parts of the system. So, standard carbon's carbon bridge technology is designed as an end-to-end system inside a standard 40-foot shipping container. For listeners who are not engineers, what happens inside that container from exhaust stream to pipeline grade natural gas?

SPEAKER_02 16:12

Absolutely. So we take the smoke, the flue gas from any exhaust, any chimney, anything that's burning fuel. So whether it is a power plant or uh factory or a boiler or a furnace, anything that is burning fuel of any kind, whether it's natural gas or even municipal solid waste or oil, doesn't it, or coal, anything. We take that smoke, that flue gas, um, it enters our product. We take it through a process, chemical process, and then we have pure natural gas coming out the other side. Now, the process in the middle fundamentally goes through three steps. Number one, we're treating that exhaust gas. So we separate the water from the nitrogen, from the carbon dioxide, all from each other. So all the different constituents of that gas we split apart and we isolate them. Then we wait for a cheap electricity event. So it's very easy to store carbon dioxide. We do that inside the container. We can store carbon dioxide as a liquid at room temperature efficiently. When there is a cheap electricity event according to the markets, whether that happens on a daily basis or even a weekly basis, or it could even be longer, we then run our electrolysis piece, which produces hydrogen. It splits water into hydrogen. And the hydrogen, when it's produced, we immediately combine with the carbon dioxide inside a chemical reactor that produces methane. And that's the natural gas permit on the other side. So those are the three pieces. Layered on top of that, there's a lot of integration between those three steps: carbon capture and electrolysis and methanation to make the system function efficiently scalable fashion.

Dr. Leeanne Aguilar 18:01

Okay. And so how quickly does that process work and how much methane can you capture within that 40-foot container?

SPEAKER_02 18:09

So the process is essentially instant. It's it's a nearly instantaneous chemical process. And the limiting factor as far as the flow rate is really the size of the electrolyzer. And we can produce within a container anywhere from six to twelve thousand million BTUs of natural gas per year. And that's and it depends on how frequently we're running the electrolyzer. So if there's cheap electricity for six hours a day versus 12 hours a day, that will impact the amount of natural gas that we can produce.

Dr. Leeanne Aguilar 18:43

Okay. And so then what happens? You've captured this the methane, the natural gas. And how do you then, you know, convert it for use or do you transport it or what happens?

SPEAKER_02 18:53

So that that's the best part, really, is once we produce natural gas, it's a product that every customer dealing with already knows how to use. So that's where the integration with existing infrastructure becomes very valuable. We can interconnect the natural gas into the existing gas pipeline infrastructure at the customer site. And that gas can then be exported out into the distribution system to other customers, or it can be stored 100% on site as compressed natural gas in tanks or a combination of those two options. Either way, we have a material which is natural gas that the customer knows how to manage. And so that's what makes what we're doing very popular. Because when we go to people and we say, say, this is new, whatever, so no, no, no, we're just going to give you natural gas, the same thing you're getting already. They say, okay, great. I know what to do with that. Yeah, awesome.

Dr. Leeanne Aguilar 19:45

So, and this is different from a lot of other decarb decarbonization strategies that start with replacements like electrifying the boilers, changing the ovens, rebuilding the plant, upgrading the whole system. So, what you're offering is completely different because it's uh decarbonization as an add-on, not a disruptor. And so, why is that distinction so important for building owners and industrial operators?

SPEAKER_02 20:08

I'll start with my favorite example, which is of a commercial bakery in Queens, New York. We get a call from this owner of this bakery, and they had received their sort of uh energy report, which said they had to replace all of their gas-fired ovens with electric ovens in order to meet the decarbonization mandate. And they said to me, they said, we can't bake our muffins with electric ovens. Uh I said, uh explained. They said, they said, You don't understand. They said, we make muffins a certain way. We service clients all over New York City, actually all across the United States. We have our own specific way of doing this. It is not possible for us to do this with electric ovens. Period. They said, if you tell me I have to, we will move out of New York City. We will move to New Jersey, we will move to Long Island, we will find another location, but we are keeping our gas-fired ovens because we are a bakery that uses a flame to heat up the oven. Period.

Dr. Leeanne Aguilar 21:09

Yeah.

SPEAKER_02 21:10

And they said, and on top of that, we don't have the electrical capacity for more electric ovens anyway, even if we wanted to. We've already looked into it for other things. We wanted to put in more refrigerators, and we couldn't because the power company, Con Edison, wouldn't give us more electricity. But even if you could give us more power, we're still not going to switch the way we fundamentally do business. So when we explained to them what we can do, they were thrilled. I actually had never sold anything that fast to. It was literally within an hour of the conversation, they'd signed a contract and wired us a down payment. So, but that use case, it's cute and it's funny because the typical use case that people bring for these what they call hard to electrify industries are steel, fertilizer production, chemical production, really heavy industry. And all of that's true. And actually, those industries. Are sort of the last on the list of a lot of folks focusing on decarbonization for electrification because of these inherent challenges. But they're really no different than the muffins. Fundamentally, it's you have a process that uh is typically done a certain way, and it's very difficult or sometimes even impossible to switch. I mean, anybody who's used a convection stove has experienced this as well. Convection stoves are phenomenal for boiling water. You know, you're gonna lose your mind switching to a gas stove to boiling water after using a convection stove. On the other hand, if you are, you know, sauteing something and the pot is not the right geometry, then you need to get one of those separate, you know, metal plates that you put on the convection stove. And now you have this blazing hot metal plate, and if your child comes up, it's like the most dangerous thing you can imagine. And it becomes this huge headache and really not an appealing user experience. So that's where the lack of disruption is essential if you want to move people fast. And that's a point of what I find to be one of the most, in a way, tragic pieces of the whole sort of climate-focused movement. Because obviously, on one side of the spectrum, you people will say, let's just burn fossil fuels and you're all crazy. Why do you even care? But then within people who care about climate, there are some that argue that anything that is not sort of pushing for an idealized kind of new construction solution where everything is electric and therefore able to be theoretically run 100% by renewable electricity on the back end is ideal. And so anything that involves combustion, burning something of any kind at any step is fundamentally bad and should be punished and disincentivized in any which way. What they missed there is that slows down the decarbonization process by decades. Because you can go to a bakery today and say, I'm gonna recycle your carbon emissions back into gas and you can keep your ovens. And my process is gonna run off renewable electricity, but you get to keep doing everything you're doing. It's just gonna cost you this much money. And they'll say, Great. If on the other hand, you go to that bakery and you say, we're gonna replace all your ovens, uh, even in the best case scenario where they say, okay, that's gonna take an enormous amount of time from all sorts of different perspectives. When you scale that across every possible application, you're talking about adding decades to the energy transition. Versus, if you want this to happen immediately, you need to work with existing infrastructure. Arguably, that's the tragedy we see unfolding today in Europe, because the Europeans are now paying three times the price uh that they were paying three months ago for liquefied natural gas. It's causing real pain across every level for people throughout Europe. And part of the reason is that since their decarbonization programs were so focused on these idealized solutions, they didn't have enough clean fuel production to replace fossil fuels. So they stayed dependent on fossil fuels for all of those existing applications, for all of those bakeries that said, we're gonna stick with making our croissants with our gas-fired bakery. We don't care for whatever reason. And now they're really in a difficult place. As opposed to if somebody had gone to the bakery in Paris and said, keep making your croissants the way your family's been making for the past 2,000 years, just let me give you clean fuel from your chimney, they would have said, you know, let's rock and roll. This is sounds great. So, and by the way, the European Civil Burst Course, they've now, since the war, invested, opened programs to invest billions in clean fuel production for this specific purpose. So that that's where I would say the existing infrastructure piece is the piece. You know, if if if decarbonization is miserable to do, forget about costly. If it's just functionally miserable, if it's a blaze if it's a blazing hot, you know, cuisinar disc that you had to buy in addition to the convection stove because your pots don't work on the convection stove the way they're supposed to, because they're not the right type of surface, if that's what decarbonization is, no one's gonna do it. Right.

SPEAKER_01 26:19

Mm-hmm.

Dr. Leeanne Aguilar 26:20

Yeah, but you're you're making it, you know, a win-win situation, creating a a solution that right, they they're getting the decarbon carbonization. I think a lot of the the costs like you're talking about, especially in in Europe these days, I mean, it comes from transportation costs, it comes from the cost of tariffs and all of that that have been introduced. Is is that what part of what you're saying and like the policies and are impacting the costs and driving up?

SPEAKER_02 26:44

All of that is true, but I'm also talking about electricity. So even in Spain and Sicily and Greece, where it's got a lot of sunshine and solar and batteries in an ideal location with enormous investment gets you to 80% of your electricity needs. Even in those locations, 20% of the time, it's cloudy, it's nighttime. The battery capacity that is deployed and even planned is nowhere near enough to give the amount of resilience needed to run the grid. So the way electricity markets work is the pricing is last in, sets the price. So even if that natural gas-fired peaker is running 5% of the time, that 5% of the time the natural gas fired plant runs with insanely expensive Texas liquefied natural gas, that's setting the price for all of the customers on the grid. As a result, because all of the energy traders that then package electricity into sort of fixed pricing for consumers, they're factoring the risk that they need to buy super expensive electricity from this beaker plant, even if it's only 5% of the time. And it's often much more than that. It's easily 20, 30% of the time. And as a result, electricity prices go up. That increases the price of every single item that we have from food to transportation to uh everything. Right.

Dr. Leeanne Aguilar 28:09

The domino effect is huge, right? Yeah.

SPEAKER_02 28:11

So far reaching. So that's that's the pain. And in Europe it's very painful, and they can actually afford the pain. You know, where it becomes tragic is a place like I was just here today corresponding with a member, a member of the energy ministry in Pakistan, in a place like Pakistan which can't afford expensive natural gas. So they just have blackouts. So in a place where they can't afford expensive fossil fuels as a result of the war, and they don't have domestic fuel production, then just refrigerators with medicine stop working, blackouts, uh, you don't have food. You know, it becomes a humanitarian crisis at a, oh my goodness, life is now really expensive in Berlin.

Dr. Leeanne Aguilar 28:50

Right. Yeah, exactly. A whole new set of challenges.

SPEAKER_02 28:53

Yeah, so so this is a I would say a very big I mean the past three months has really sharpened the focus on the fact that um it's been a wake-up call to the world that the renewable electricity alone can only replace fossil fuels if it's a hundred percent uh reliable a hundred percent of the time. Renewable electricity with batteries in no location has proven to be able to provide a hundred percent. So you need fuel. So then the question becomes do you want to produce fuel from renewable electricity? And that's what we're focused on, doing right.

Dr. Leeanne Aguilar 29:32

So many people hear green hydrogen and and immediately think of the challenges like transport, storage, new pipe pipelines, new equipment. Why does converting hydrogen and captured CO2 into methane change the commercial equation?

SPEAKER_02 29:45

For so many uh technical pieces. So, first off, there is no global liquid market for hydrogen. So even if there were zero technical issues with producing and selling hydrogen on its own, there are no buyers today for hydrogen. So if you're in the hydrogen business and let's say you've mastered all the pieces of producing a ton of hydrogen, depending on where you are, you're still gonna have a very hard time selling it because the use cases for hydrogen are limited. On the other hand, natural gas is a globally traded liquid commodity, meaning once you put that gas in a pipeline or on a truck or on a ship, there is always a buyer, especially today. But there's always a buyer, so it's a lot easier to finance a project that results in natural gas than it is to finance a project that results in hydrogen. Because the first thing an underwriter is going to look at is who's buying the product and demand. Yeah. And so for the hydrogen developer, he has to provide this tortured explanation of, oh, we have this one major off taker with government guarantees. And in the event that they pull out, then the whole thing falls apart. But hopefully they won't. As opposed to if you're producing natural gas, you say, look, this is my cost of production. I do have this off-take agreement, but the market historically has been at this price. So even if that offtake agreement fails, we could sell straight into the open market and expect this outcome. We can probably negotiate a new off-take agreement because everybody's buying natural gas anyway. So before we even get into the physical hardware, from a financial engineering standpoint, it's really hard to take out debt or raise money for hydrogen because you don't have the demand versus natural gas before you do. And if you can't get money, then you know you can't fill the business, you can't do anything. So that's a really important thing. Of course, yeah.

Dr. Leeanne Aguilar 31:37

It's gotta be sustainable. I know very, very true. Now you've described the natural gas grid as essentially the world's largest battery because it can store fuel for months and move energy across time and geography. How should business leaders rethink energy storage beyond conventional batteries?

SPEAKER_02 31:53

So let's be clear. One of the reasons why Europe is suffering so much today is because they are legally mandated by law to fill their natural gas storage reservoirs six months in advance of the winter. So their reservoirs are empty. They have the summer to have them full so that when they get to September, they are ready to go for an early October snow. And nobody, God forbid, freezes to death. Because, as I said, keep in mind, heat in northern Europe is not a luxury, it is life and death. So they have to make sure they fill the storage. Now, what that implies and is, is that gas is not stored on a 24-hour or six-hour basis like a battery. Most battery deployments are storing electricity for two to four hours today. A lot of ambitious projects, they call them long-duration energy storage, where they'll go maybe to 12 hours. That is still a very profitable, but from a functional standpoint, trivial amount of energy storage compared to natural gas, where you're storing energy for months at a time. So you store a whole winter's worth of gas within one distribution network and transmission network that already exists. So instead of having a few hours of energy stored up, you can have in the gas grid months of energy stored up. That's what real safety requires. That's how you prevent blackouts, is knowing that you have a stockpile of so much energy that you never have to worry about a disruption suddenly causing the lights to go out. And so when I say the gas grid is the world's biggest battery, we already have a distribution network, including uh reservoirs and transmission to move a titanic amount of energy. That has to go, and that goes back to the laws of physics. When a methane molecule has more than a hundred times the energy density of a lithium-ion battery, an electrical sample system. A gas pipeline can typically transmit orders of magnitude more energy than an equivalently sized high voltage power cable. And all that has to do with just physics. So because you have more energy density, you can store significantly more orders of magnitude more within the gas network. And the best part is it already exists. None of it needs to be built. There is so much political stress over installing new transmission lines for transmitting power to different places. Now we should do that. It's worth doing. But as an aside, we already have a transcontinental energy transmission system. It's called the gas grid. It works exceptionally well. It's also global in nature with liquefied natural gas. And what that means is if the focus were to shift from how do we turn renewable power into gas, as opposed to how do we move renewable power via power lines, then we could install significantly more renewables and we could also eliminate the phenomenon of negative pricing or cheap power pricing. Because if every electron of wind power at two o'clock in the morning that nobody needs at two o'clock in the morning can be turned into natural gas that can then be put in the pipeline and sent anywhere, then suddenly that wind electricity at two o'clock in the morning is worth as much as wind electricity at two o'clock in the afternoon.

Dr. Leeanne Aguilar 35:18

It doesn't matter because you can store it totally.

SPEAKER_02 35:22

Wind on a cool, you know, May uh night at two o'clock in the morning in Nebraska, there is no demand. Okay, it's not you don't need heat, you don't need air conditioning, wind is blowing like crazy in Nebraska, and you have all this power useless. On the other hand, if all of that wind was blowing into natural gas that went into a pipeline, into a reservoir, and then was used to heat the city of Chicago that winter, suddenly it's worth a fortune. Suddenly you can install more wind turbines because it's paying for itself as opposed to being uh a financial and technical burden as well, because you have all this power that the grid doesn't now have to manage and pay to manage.

Dr. Leeanne Aguilar 36:03

So basically, your system makes intermittent power a strategic advantage rather than a limitation. Absolutely.

SPEAKER_02 36:10

Everything we're doing is built on the premise that we want renewable electricity to be the primary energy source. So we don't eliminate fossil fuels by avoiding the use of combustion-based systems and fuels. We eliminate fossil fuels by pushing them out of the system with clean fuel that we produce from renewables, from solar, and with that. That's the idea. We want to keep the gas infrastructure. We just want to use it with gas we produce from the sun, from the wind, as opposed to gas that comes out of the ground.

Dr. Leeanne Aguilar 36:40

And I also understand your system is transportable and you can use it in places that don't have access to like the natural gas grid and it's portable and more um flexible that way.

SPEAKER_02 36:51

Right. Well, so where where these things where these applications get very fascinating is um think of Hawaii. Hawaii has some of the highest electricity prices anywhere in the world because they're not on any form of gas grid, obviously, and they don't have any gas resources of their own. So what they do have is diesel generators that come in by a ship and they're smack in the middle of the Pacific Ocean. You know, everything's coming from very far away. And so even with all the solar that they have been deploying and batteries that have been deploying, they still are using their diesel generators for a significant portion of the time. Now, if they could replace all of that diesel that they're shipping in with fuel with natural gas that they produced on site in Hawaii with solar panels, then one they'd be safer, they'd be energy independent, they wouldn't be dependent on uh shipments from Texas that for whatever reason someday may not come. But number two, they wouldn't have to pay tax on a fortune to bring them oil from Texas because they would be producing all that fuel right there in Hawaii, and that would be financially much better for them as well.

Dr. Leeanne Aguilar 37:58

So there's a chain reaction of benefits. Right, very cool. So when you think about competition, you've said that the real comparison is not just other carbon tech companies, it's fossil fuels and in some ways battery developers chasing the same cheap, clean electric electricity. How do you evaluate where standard carbon can win economically?

SPEAKER_02 38:16

So for fossil fuels, we are focused on markets which um do not have piped natural gas being produced in that location. So Europe, since they don't produce natural gas in Europe, is a phenomenal market. We can, at these prices anyway, pretty much always produce natural gas cheaper than the fossil fuel price. And then in Europe and North America, where anyone that's using oil, especially at these prices, we can produce an equivalent amount of natural gas cheaper at a cheaper price on location than the cost of buying oil. So if they can switch their device from running on oil to running on natural gas, then we can offer them a price discount. We can't compete with natural gas where it's extracted on price. So if you're in the Permian Basin, um, natural gas actually is negatively priced because they don't have enough pipelines there. So they pay you to take natural gas in the Permian Basin in Texas, depending on where you are. If you're in the Marcellus shale in Ohio, uh the eastern uh western Pennsylvania, the gas is still very cheap. We can't compete um purely on price there. So in those locations, we'd have to have some form of decarbonization mandate to make it work. But in Europe and these other locations, we can produce gas cheaper. Now, with the electricity piece, um the what what the battery developers have basically done is they've started, hasn't happened yet, but they starting to flatten to an extent the daily electricity price curves. So you don't have as much volatility in electricity pricing on a daily basis as you used to have, say, even two years ago. And that's continuing to occur. But what batteries fundamentally can't do, and again, this goes back to the laws of physics, it's not a limitation on desire or even capital, it's just that battery can't do it, is they don't store energy on a seasonal or even weekly basis. At the most, people are talking about 24-hour batteries, which are extremely rare. Uh so if we look at an electricity market that has a cheap power event maybe once every two days, well, that's something a battery developer would never even touch. Because they're looking for a daily signal. They say, okay, I know every day solar goes up in California at 12 noon, and I'm gonna buy electricity when it's cheap at 12 o'clock, and then I'm gonna sell it when it's expensive at 6 p.m. or 7 p.m. Okay, at sundown. That's the battery playbook. So we're not really looking at it from that perspective. We're looking at it from the perspective of, okay, I know that at 2 o'clock in the morning, every Sunday night, there is a massive oversupply of wind power in this location because of the usage patterns and the habits and everything else. There's just a lot more power than there's demand. Every week this happens. So we want to build our system around this major negatively priced cheap electricity event that happens on a weekly basis. It's it's a totally different lane than the battery developers. And it's something that, as I said, they would never look at because they don't buy electricity, they don't design around a weekly low pricing event or even every day, every two days. It has to be daily. And if they don't have that, it's typically not a model to be able to finance.

Dr. Leeanne Aguilar 41:26

And the economics look very different, I know it like in North America versus Europe, especially with the cheap domestic gas in the US and energy security concerns in Europe. How are you prioritizing markets, customers, and use cases as you scale?

SPEAKER_02 41:40

So our um real focus right now is on um the United Kingdom and to a lesser extent other locations in Europe, particularly the United Kingdom, because they use a lot of natural gas. It's a very cold climate, and we can offer just cheaper gas than the fossil fuels that they're buying from overseas. Within that, there are industrial customers, heating plants, as well as power generation. And all of those verticals we are marketing to and approaching.

Dr. Leeanne Aguilar 42:12

Yeah, I was just gonna ask that. Yeah, who are who are your customers? Are you focusing on industrial or municipality, individuals, you know, um?

SPEAKER_02 42:21

Yeah, uh our our sweet spot is at this point looking for customers that are locked into a combustion-based piece of equipment for one reason or another. So power plants for sure, definitely focused on power plants, but also cement factories or chemical factories, other industries, food industries, wineries, breweries, all these types of distilleries, food industries have enormous useful, you know, boilers and other types of systems. And then also uh commercial real estate and multifamily buildings, oftentimes.

Dr. Leeanne Aguilar 42:50

Now you frame this work not only as a climate solution, but also as an energy security and national security issue. How have 9-11 fossil fuel funded conflict and more recent energy shocks shaped the deeper mission behind standard carbon?

SPEAKER_02 43:04

Sure. So look, I fundamentally the price-setting location for fossil fuels has been the Middle East. And these are universally progressive, non-democratic countries that really don't reflect Western values at all. And because we need fuel, we've just kind of given them a pass in a way that perhaps we wouldn't engage with them the same way if we weren't so dependent on them. Um and we've seen this over and over and over again, and it it it goes into a lot of, I would say, the fatigue in the United States with engagements in the Middle East and the question of why these wars recur. So to the extent that it's possible to detach completely from fossil fuels, we detach completely from um a part of the world that has been working against us in every possible way for for a very long time.

Dr. Leeanne Aguilar 43:53

So that that's how politically yeah. Political freedom, I guess.

SPEAKER_02 43:59

Uh Yeah, I I mean I like to talk think about the example of France. So the one country in Europe that actually has not suffered anywhere near to the same degree as a result of the current gas crisis, fuel crisis as others is France. Because uh after the first oil crisis in the 1970s, the French people and government decided they were not interested in ever suffering from basically being blackmailed by OPEC and the oil-producing countries ever again. And so they said that they're going to become energy dependent. And the what they had available at the time was nuclear power. And so France produces more electricity from nuclear power than any country in the world as a percentage of its total consumption. They have an enormous nuclear power fleet. And so when this happened, it didn't really impact electricity prices in France because almost all the electricity in France comes from nuclear energy, and they don't need anybody. They're dependent on nobody. And it took them time to get to that place, but it's proven to be extremely prescient as far as the strategy. So to the extent that you know we can follow that model and we can do it with renewables, and as opposed to or in addition to nuclear, it really creates a big opportunity. Yeah.

Dr. Leeanne Aguilar 45:14

Now you're building a company that has required deep RD patents, grants, capital, commercial deployments, and now partnerships across regions. What has been the hardest leadership lesson in moving from engineering insight to a scalable company?

SPEAKER_02 45:28

The hardest lesson is always knowing when to shift gears. So at each stage of building the company, um, you have different priorities. So in the earliest moments, it's it's going from a PowerPoint to any type of proof that your product can work in any which way, any type of proof point, whether you know it's in the lab or it's a letter of intent from a customer saying that once you build it, they'll buy it. Um you spend a lot of time just trying to prove to investors that it will work once you're funded and once you get up and running. And then after, but but at a certain point, hopefully you progress that past that stage and you've proven that it's gonna work, uh, or you have a product that does work, and then you need to go out and sell it. And there's always this question of you know, well, at what point is what I have good enough to sell? Because you can't wait until you know it's already sold and in the market because then you'll never sell anything because you have to start somewhere. So at a certain point, you have to kind of dive into the you know the cold water and run with your pilot scale or prototype product and start selling it. And that's you know, not a letter of intent, but actually going and charging money to somebody to do something that you've done before, but not necessarily commercially. So it's the the first customer, and how do you engage them? And the same goes on the engineering side as well. At what point do you say, I built something that works and proves it can work, and now I need to kind of take it apart and redesign the whole thing around being a product that's going to be reliable and practical to use. Well, that's a totally different skill set. It might even be totally different people, and so there's a lot of um these kind of transitions through the life cycle of the company you go through. And the people you need at one stage sometimes are not really the best people that you need at the next. And so it can be painful to go through these transitions because you might have to have work with different partners, different employees. It it's it's gonna be very tough.

Dr. Leeanne Aguilar 47:33

Yeah, so just having that awareness that during each step it there might be change. There might be during the transitions, I mean, they might um bring in other kinds of change as well that you don't expect, is is what I'm hearing. Transitions like or or turnover in people. But then how do you I get going back to the first part of the question, how did you know like when to step into commercialization, like when to actually release your first product?

SPEAKER_02 47:58

Well, it really came down to we had we reached a point where there were customers reaching out to us for solutions. So we had been talking about what we were doing, we'd been socializing it a lot, and so we had customers starting to reach out to us uh for a solution, specifically in New York City. And then at the same time, we had deployed a pilot in New York City with City College, and it's it's still it's open to the public, it's operating today. And so I can't remember the exact day, but we just kind of reached a critical mass where people were asking for proposals, and then we prepared one, and then once you prepare one, you start to start to start marketing and commercializing the product.

Dr. Leeanne Aguilar 48:34

Right, yeah, there's that proof of concept, it's working here. We've got our example here. That's interesting though, that you have one available in New York City where people can go and and tour it and look at the technology, the container itself.

SPEAKER_02 48:46

Yeah, yeah, we love uh guests, so we're we're happy to host. Um we're deployed at at City College um at the boiler plant in the chemical engineering building uh in Harlem on 140th Street, and we right off the subway, happy to uh host.

Dr. Leeanne Aguilar 49:04

Very cool. And so finally, Natan, for CEOs, founders, manufacturers, and investors listening, what should they be watching right now in carbon regulation, fuel markets, and renewable energy that can turn decarbonization from a compliance burden into a strategic opportunity?

SPEAKER_02 49:21

The biggest change that's going on in energy markets today is the shift from credits and offsets, where you kind of plant a tree somewhere and that covers the CO2 emissions that you release somewhere else to an energy system where the market and regulators are really interested on only incentivizing uh clean power when it is needed. So the days where you can produce electricity at two o'clock in the morning from a wind turbine and uh get environmental credits for that are rapidly receding. Um what's what's replacing that is, and this is incidentally interesting, fascinatingly coming from both right and left, because the left are saying we only want to give the end user credit for clean electricity they actually used, as opposed to some form of offset. And then right-wing folks are saying everything needs to be about energy reliability, and if the power isn't 24-7 available, then we're not going to encourage its development. So both of those perspectives meet at the nexus of energy storage, which I think is the most exciting place to be. So whether it is in batteries or it's in uh chemical energy storage, which is what we're doing, compressed air energy storage or thermal energy storage. I mean, there are so many different types of approaches. Anything and everything in the energy storage space has become extremely um hot because you have this kind of bipartisan focus on it. The left-wing climate folks, they want the real deal. They want to be able to say, we actually use only clean electricity. So that means that at times where the sun is not shining, it's solar electricity that was stored somehow and then dispatched to us. And as I said, you know, the current Secretary for Energy in the United States, but he's not the only one. His regulators all around the world. They're really focused on how we can incentivize dispatchable, reliable 24-hour power, not intermittent sources of right.

Dr. Leeanne Aguilar 51:28

Well, exciting solution you have here. So well, thank you, Natan. Thank you for joining us and for sharing the story behind Standard Carbon. How can listeners learn more about you, Standard Carbon, or ways to partner with and support the company?

SPEAKER_02 51:43

So, as far as learning about us, our general website, standardcarbon.com. And then with respect to partnership, we're currently running a regulation CF crowdfunding investment campaign at invest.standardcarbon.com. So we'd love to see you there and have you join the standard carbon family in that respect.

Dr. Leeanne Aguilar 52:02

Great. Well, thank you again. It's a fascinating conversation. Excited to see your technology one day when I'm in New York.

SPEAKER_02 52:09

We look forward to hosting.

Dr. Leeanne Aguilar 52:12

All right. And to our listeners, thank you for tuning in. And be sure to subscribe and join us for the next episode. Until next time, stay bold, stay curious, and keep igniting industry.