You've Been Warmed

Blockchain Powered Carbon Removal Marketplaces w/ Nori

Episode Summary

Nori CEO - Paul Gambill - joins the pod to discuss how his company has built a blockchain-powered carbon removal marketplace which addresses a lot of the current issues around carbon offsets & enables companies and individuals to purchase actual unique tonnes of CO2 that have been provably removed from the atmosphere.

Episode Notes

Nori is a Seattle-based company which utilises the power of blockchain technology to enable carbon removal through their marketplace. They focus on actual tonnes of CO2 being removed from the atmosphere (thus avoiding offsets) and use blockchain to ensure that each removed tonne is only counted once and thus is unique. This combination is an innovative approach to the problem of double counting carbon offsets.

In its initial phase, Nori is focusing on enabling farmers to get paid for storing carbon in their soil. They use sustainable farming practices to remove carbon from the atmosphere, the removed carbon is verified and quantified by 3rd party attesters after which it's verifiably converted to a certificate which individuals & companies can buy to prove they paid for carbon removals.

Paul Gambill is the CEO & Co-Founder of Nori. He established the first community dedicated to carbon removal called Carbon Removal Seattle. He has 6 years of experience in managing mobile and web application projects for clients including Nike, Showtime, Target, and Starbucks, and has shipped well over a dozen different apps to the public.

I can also attest that he's extremely knowledgeable about climate change & blockchain and one of the best people I have encountered to explain complex concepts in simple to understand terms.

NORI RELEVANT LINKS

Website - https://nori.com/

Nori Podcast Shows - https://nori.com/podcasts

Twitter - https://twitter.com/nori

YouTube - https://www.youtube.com/channel/UCnNvzB1J0HZVyO-v6eIWjDA/featured

TIMECODES

2:35 - Paul's background & his engineer-type approach to climate change

9:36 - Carbon removal vs offsets - what is the difference?

12:58 - The Jevons paradox & how it comes into play with offsets

16:10 - Can carbon removal be achieved at scale?

20:01 - Why Nori is focusing first on regenerative farming practices

26:40 - How Nori ensures accuracy of carbon that is removed

28:55 - How the carbon removal marketplaces works in practice

31:05 - How Blockchain solves the double counting of carbon offsets

37:03 - How Blockchain works & why it's crucial for Nori's solution

39:23 - The Nori Carbon Removal Ton (NRT) - a non-fungible token

40:50 - Does Blockchain need to evolve for Nori to be able to work?

47:20 - The difference between Nori and other blockchain solutions tackling climate change

48:20 - Market launch & trading of the token

54:00 - Science vs Politics vs Businesses vs Society

LINKS MENTIONED IN THIS EPISODE

IPCC Report - https://www.ipcc.ch/sr15/

Jevons Paradox - https://en.wikipedia.org/wiki/Jevons_paradox

COMET-Farm - http://cometfarm.nrel.colostate.edu/

Episode Transcription

Paul Gambill: (00:00)
Yeah, I completely agree. Something changed in the second half of 2018 it's completely different now in terms of the cultural landscape, the the way that policy makers talk about this, the way that businesses talk about this culture has shifted and I think that that's the most important thing because politics is really a lagging indicator of the way that people are thinking about things. It's culture that leads the way. [inaudible]

Intro: (00:27)
Ladies and gentlemen, you've been more, it's time to figure out the climate crisis with the top scientists, activists and entrepreneurs helping us get out of this mess. Now let's welcome your host that I, gosh, in three, two, one

Dragos: (00:54)
A warm welcome to everyone. Today we are going to talk climate change and blockchain. I had the pleasure of chatting with Paul Gamble, CEO and co founder of Nori, a carbon removal marketplace that makes it simple for anyone to pay farmers for storing carbon in soil. Now, I have to admit initially I was a bit skeptical because having seen a lot of token models in the blockchain space, I reached the conclusion that a lot of those companies didn't actually need to create a different token for their businesses to function properly. They basically were just a fundraising mechanism. However, I think Nori serves a really good purpose in that it can combat double counting of carbon offsets through the main innovation that blockchain brings to the world, which is creating digital unique assets that reside on the blockchain. Now I know for people who are not in the blockchain space are not familiar with crypto.

Dragos: (01:50)
This might sound super complicated. I was really impressed though with Paul because he's so good at taking a step back and explaining difficult concepts in plain terms and coming up with clever metaphors that help you understand what they're working on that it really made the whole conversation much easier to digest. He's extremely knowledgeable on all aspects, climate change related, so you'll hear us go into various details like regenerative farming or carbon offsets versus carbon removal. This is an episode that I've enjoyed a ton and I hope you will enjoy it as well. So I'm joined here by Paul Gamble, CEO of Nori. How's it going?

Paul Gambill: (02:32)
Great. Thanks for having me on.

Dragos: (02:35)
Awesome. So before we actually dive into the carbon removal and what you guys do at Nori, I was just curious and I ask every guest this, what's your background and how did you actually decide to tackle climate change? Cause we all have our own stories. Some of us got involved kind of let's say later, like more recently and some of us have been doing it for like 10 years or so. So what's your story?

Paul Gambill: (03:00)
Yeah, well, I studied computer engineering in college and for the first about five or six years of my career, I was working as a product manager at Deloitte Deloitte digital building big mobile apps for big brands like like Showtime anytime. And in 2015 I had left consulting and I was looking to start my, my own business. I'd already started one before and wanted to do something a little bit bigger. And I, what I focused on most was that I wanted to work on an area that would really attract a lot of very talented people to work on it. And it seemed to me like climate change was an obvious choice for that because it was something that a lot of people cared about back then. But there was it, it was just so obvious to me that more and more people would care about this in the future.

Paul Gambill: (03:52)
So as I started digging in and trying to understand like what are the different things that different industries are doing to try to solve climate change? I w came at it from a, I perhaps naive, but just very straightforward engineering perspective, which is to say that if climate change is a problem because there are too many greenhouse gases in the atmosphere, then the solution should be very straightforward. We should pull those gases back out and store them somewhere safely. So with that insight, I started looking around and wondering, alright, who's doing this? Surely there are companies trying to build a business model around this and there was nothing. So what I did was I, I founded a meetup group yeah, in Seattle where I've been for the last nine years and I wanted to meet other people who were interested in working on climate change and interested in specifically what's become known as carbon removal.

Paul Gambill: (04:50)
So removing CO2 from the atmosphere. And after about a year and a half of running that monthly meetup where we were mostly just like reading papers and books and kind of sharing information with each other about the different efforts that researchers and others had made into carbon removal. I had, I realized that I pretty much met everyone in the world who was working, which was sort of scary at the time because that, that, that was nowhere near enough people. So it wasn't until 2017 in the summer when my first cofounder and I, Christoph Joss Bay got together, I'd known him when he was working at the center for negative carbon emissions at Arizona state university. And I'd been working on a business model idea around a marketplace for carbon removal as opposed to carbon offsets, which are different. And I'd also been working on a project with one of my other co founders that we were basically building the precursor to what became Nori, which is, it was a blockchain based token that could be paid out to farmers for storing carbon in their soil. So everything kind of came together in 2017 as we we realized that there, there was a viable business model here. So we put together a team and we entered the blockchain for social impact hackathon. That consensus sponsored that fall and we ended up winning in the energy environment category. So that was enough validation for us to get the company started.

Dragos: (06:24)
Wow. That's really interesting. So kind of, I really, I can really relate to that because I've realized, and I'm sure knowing in business there's these cycles and lot of times you can have a great idea, but you might implement it earlier. Then kind of like mainstream, the mainstream gets on board. And if you're late, then you have lot of competition. And I've seen that with crypto because I got into crypto in 2017 just before the the crazy boom. And that was a good time. But you actually thought about climate change very early on and you coupled it with blockchain and now both of them, blockchain kind of exploded more so as an as awareness, not the technology development and maturity with two years ago. And now I kind of feel the same way I was feeling about blockchain. Correct me if I'm wrong or maybe you have a different opinion on this. I kind of feel the same way now about climate change in the sense that there's been a lot of awareness coming to it this year, especially with Gutenberg and extinction rebellion and aloft talk on the, on the political landscape as well. And I'm sure that all these startups that are popping up will actually be needed and they will grow a ton in the next five to 10 years because they have to, because technology will be a big part of us actually mitigating the impacts of global warming.

Paul Gambill: (07:46)
Yeah, I completely agree. Something changed in the second half of 2018. It's completely different now in terms of the cultural landscape, the the way that policy makers talk about this, the way that businesses talk about this culture has shifted. And I think that that's the most important thing because politics is really a lagging indicator of the way that people are thinking about things. It's culture that leads the way. And w I think the the sort of initial moment was the IPCC report that came out in the fall of 2018. That was the first thing. And then and I think Gretta actually started her strikes maybe a little bit before that, if I remember correctly. But then she started getting more attention meet a large mainstream media outlets were putting more attention on this. And now we've gotten to the point where at least in the U S we have policymakers putting forward ideas like the Green New Deal, which whether or not you think that's a good idea. The fact that they're talking about it in such a large and grandiose way is new

Dragos: (08:54)
And it the Overton window.

Paul Gambill: (08:56)
Yes, exactly. Yeah. So I, I, that's not going away. Mmm. So that's, that's why I think that politics kind of lags behind. But yeah, there's, there's more and more interested in this. And the private industry side of this is really interesting too, because we're starting to see more and more companies waking up and realizing, Oh, man. [inaudible] Okay. Consumers, our customers are really demanding that we do something about our emissions. It's these institutions who are now being pushed by there the, the people that they serve [inaudible] treat their carbon footprints with the responsibility that they're owed.

Dragos: (09:36)
Yup. I completely agree. Completely agree. So, okay, let's go into what you mentioned before because I'm, I myself might not understand exactly the difference, but, so why is carbon removal so important? I guess that's obvious, but let's dive into it and what's the difference between carbon removal and carbon offsets?

Paul Gambill: (09:59)
Yeah. Well, yeah, let's start there. So a carbon offset that is a project that promises to avoid future emissions of CO2. So you might think of building a wind power plant instead of building a natural gas power plant. So that's a, it's saying that we're going to do something that's going to result in overall less carbon going into the atmosphere overtime, which is good. We have to do those things because we have to decarbonize our economy. Okay. Yeah. At the same time, we've all admitted well over 1 trillion tons of CO2 up into the air over the last 150 years. So what are we going to do about that CO2 that's already up there? That's right where carbon removal comments comes in. So carbon removal is the concept of extracting CO2 and other greenhouse gases that are already up in the atmosphere and then pulling them out and storing them somewhere safely in the earth and rocks and manufacture products, what have you.

Paul Gambill: (10:59)
There are lots of different ways to do that. That's big difference. And when you hear policymakers talk about carbon markets and carbon offsets and so on especially we're recording this, right? During the cop 25 meeting in Madrid what they're talking about is carbon offsets. They're not really talking about carbon removal at large scale yet, and carbon offsets introduce a whole bunch of other really complex challenges that make it difficult for investors and businesses to transact in. So one of the w one of the big questions is if, if you're going to pay someone to avoid future emissions, how do you know that you're like, the fact that you're paying them is actually making a difference? Like what if they were already going do that it is it worth it to pay them if they were already going to do that, if market forces were already pushing them in that direction? Yeah, that's a question. And refers to a term that's called additionality in carbon markets and additionality for carbon Austin, it's very confusing, but additionality for carbon removal is far more straight forward because you have to do something new to pull carbon out of the air. So if you're taking actions that remove CO2, then almost by definition it's additional because you've, you've done something new to pull carbon out. [inaudible]

Dragos: (12:27)
Right. And correct me if I'm wrong, but with offsets, I know a lot of companies are accused, not accused, but if you give them the, the possibility of buying offsets rates or when they let's see, they emit a certain amount of CO2 and the by an offset so that another company somewhere else in the world plants trees or does something that in theory will pull that carbon out of the air that doesn't actually incentivize them to decrease their own emissions. Correct.

Paul Gambill: (12:58)
Potentially so you refer to planting trees. That is actually kind of the one form of carbon removal that has ever happened at any large scale in the offsetting market is planting trees. But there's another thing that you're nearly referencing which I, I don't know if, are you familiar with Jevons paradox? Okay.

Dragos: (13:18)
No, please tell me more about it.

Paul Gambill: (13:21)
And Fox is named after this economist, so something Jevons where if, if you build a more renewable energy capacity [inaudible] you might think that that's going to mean is, okay, great. That means we're going to use less fossil fuel based energy or we're going to switch over to this new renewable energy instead. Yeah. But what in practice actually happens is that people just end up using more energy overall. So it's sort of the same concept as maybe you've seen that if you have like, say a four lane highway for cars and it's, it's just bumper to bumper traffic all the time. And so people demand that you add more lanes to it so you can increase the throughput on that highway. Yep. Let's say you double the size and now it's an eight lane highway, it's going to get to bumper to bumper traffic just the same because as the supply increases, the demand for that, that thing, the throughput is going to increase as well. Mmm. So, okay. The idea of offsetting by building renewable energy and stuff to me doesn't really make a whole lot of economic sense because you're not necessarily [inaudible] displacing fossil fuel energy. You're just adding more renewable energy that will be consumed by new demands. Gotcha.

Dragos: (14:50)
Okay. And plays

Paul Gambill: (14:52)
Into the whole,

Dragos: (14:54)
You know, like basically emerging countries emerging like China African countries that like there will be more demand, more energy demand in the next 10 to 20 years and a lot of that will come from oil and gas. Right?

Paul Gambill: (15:10)
Yes. But it also refers to some of the equity problems that people talk about when it comes to dealing with climate change, which is if one of the rich Western countries is paying a developing country for building a renewable power facility and they're using that to count against their carbon reductions. Like, is that actually reducing the amount of carbon that was going to go in the air? Okay, I see.

Dragos: (15:33)
Okay. That's the perfect example. That's why I wasn't making the link. Okay. So that, that can be considered an offset. Okay. Now I can trend point. Exactly.

Paul Gambill: (15:40)
And that's the problem with carbon offsets is all these questions about them exist and there's never been a really good way to quantify what is actually happening there. So that's why what we're doing at Nori is just focusing exclusively on carbon because it is a far, far more straightforward and simpler conversation to have because you're talking about paying people for removing CO2 from the air. That was, that was up there to begin with.

Dragos: (16:10)
Okay. That makes all sense. So let's talk about carbon removal then. Can it actually be achieved at scale and how would you do that?

Paul Gambill: (16:17)
Yeah, so we tend to think of these in terms of three different buckets. The first are ecological methods. This would be things like a forestation or reforestation, which is just planting trees. There's a huge, huge opportunity in regenerative agriculture. So this is farmers making changes to the way that they farm their land, like reducing the amount of tillage or plowing that they do, planting cover crops and doing more complex crop rotations that that can pull down typically on average maybe about one ton of co two per acre per year. So there's enormous potential in crop lands around the world, right? Somewhere between five to 10 billion tons of CO2 could be pulled out of the ATMs every year just by adopting regenerative agricultural practices. There are other ecological methods that haven't really been tested at scale yet.

Paul Gambill: (17:16)
Like growing seaweed. That's actually why we named our company Nori because seaweed is a really, really great way to pull carbon out. It's also a really nutritious food product that we're not using as much as we maybe perhaps should. And then there are other blue carbon methods that people talk about increasing the amount of wetlands and restoring mangroves along coastal areas, that sort of thing. And then there are industrial methods. So industrial methods are things like direct air capture, which is probably the sexiest method of carbon removal there is. There are number of companies around the world who have built basically pilot facilities at this point that can pull in air from the atmosphere. And then they all have their own unique process for separating the CO2 from the rest of the gases in the air. And then that separate a CO2 is in a pure form.

Paul Gambill: (18:10)
So you could do different things with it. You could use it to manufacture products and there are already companies today that can make a medical grade plastic out of captured CO2 like that. Or you could inject it into underground rock formations where it's actually going to mineralize and turn into rock. And that's a very, very permanent storage. Other industrial methods would be embedding CO2 in construction materials. So there are carbon negative cement companies out there as well as doing things like using sustainable forestry to build wooden skyscrapers. [inaudible] The sky's the limit really when it comes to industrial methods there. There just needs to be more of an incentive for people to jump in and figure out ways to innovate into using carbon dioxide or carbon in unique ways that can pull it out of the air and provide some sort of value. The, the final bucket or hybrid approaches between the two. And I've already kind of mentioned some of those.

Dragos: (19:15)
Wow. That's really structured and really comprehensive. I can tell you guys do a podcast. He must have had a lot of time to structure. You're kind of like all the knowledge and to have like an overview of everything. Plus you've been in this place for awhile.

Paul Gambill: (19:29)
Yeah. We're we're a little over two years old at this point. So that, I mean, what I, what I just kind of went over is what got me excited about this back in 2015, which is to say we already have the tools and technology and processes that we need to reverse the [inaudible] problems of too much co two in the air w they already exist. We can already do it. We just have to figure out how to mobilize the industries at scale in order to do so.

Dragos: (20:01)
Gotcha. That makes all sense. And you guys, from what I can tell, you're focused on, so Nori is a, is a marketplace for carbon removal and you're focused firstly on regenerative farming, right?

Paul Gambill: (20:14)
Yeah. Ultimately we're agnostic to the different methods of carbon removal. In fact, what we want is for all of these different methods to compete with each other on margin. And so just let them, let market forces sort out a, which is going to be the most efficient, which is the most cost effective, that sort of thing. We're starting with regenerative agriculture for a few reasons. One is that it by a decent amount, the most affordable method of carbon removal available today. Another reason is that it actually brings with it a number of different co-benefits are really useful. So well, it turns out that, well actually, let me back up and explain really what's happening when you adopt these regenerative practices. So let's say you're a farmer and you're doing what we would call conventional practices. And I'm doing air quotes here. And it's funny because we call these conventions.

Paul Gambill: (21:06)
This is really only like postwar practices with the rise of industrialization and the second half of the 20th century. So what you do is at the beginning of each season, you plow your land very heavily, so you get a nice, smooth flat, a surface, and you plant your crop and then in the fall you harvest your crop. Okay? And then you let your field sit empty or fallow throughout the winter and then you repeat the process all over again. And each year you're having to use more and more fertilizer in order to grow the same amount of crops. Because what you're doing is you're extracting nutrient a value out of the soil by doing this. It's, it's sort of like if you were to try to live off of a diet of potato chips, yeah, you could live for awhile. But you would start introducing problems and your body would start degrading and you would get sick a lot.

Paul Gambill: (22:02)
And that's basically what we've been doing to our soils all around the world for the last 70 plus years. So what regenerative practice is, are, is we're looking at the organic matter in soil. So soil is a combination of dirt and minerals and organic matter like microbes and microscopic guy and worms and nematodes and all sorts of other little critters. And when we are doing conventional practices, what we're doing is we're taking that soil and we're turning it over and exposing all of that organic matter to the air in which most of it dies off. Yeah. By adopting regenerative practices, again, that's like reducing the amount of plowing that you're doing so you're not disturbing the top layers of the soil as much. You plant cover crops in the winter, so you keep roots in the ground year round and you do more complex crop rotation.

Paul Gambill: (22:58)
So you're changing up the different types of crops that are in that field each year. By doing that, what you're doing is when a, when a plant is in the ground and it puts down roots, it acts like a funnel. So through photosynthesis, it's pulling CO2 out of the air and then it's depositing nutrients like sugars and starches into the soil and those microbes are feeding off of those nutrients and in turn they're breaking down minerals and providing those back to the plant. So it's a very symbiotic sort of relationship by planting cover crops, especially in the winter, you're continuing to provide nutrients to those microbes year round. And then by reducing tillage, you're not disturbing the the organic matter. So what the of regenerative agriculture is is to actually increase the amount of organic matter that's in the soil because that organic matter yeah. Is the carbon. Does that make sense?

Dragos: (23:56)
Yeah, it makes a lot of sense. It's super fascinating how eloquently and simple you can break it down, but it's actually quite complex. It's, it's super cool. I'm learning a ton here. So yeah, I guess, I guess my question is how, like how big of an adjustment is it for these, for these farmers that have been doing this? Cause I assume a lot of them. For a lot of them it's just been the way they've always done things. So there's a certain learning curve. And I also assume like a certain investment required for them to, I don't know, get the tools and all the knowledge to, to implement this. Right?

Paul Gambill: (24:32)
Yeah, that's right. So farmers want to adopt these practices, not necessarily because they're storing carbon, but because they want to restore the health of their soil because they can grow more crops and they can grow more nutritious crops this way. So they have their own internal incentives, which is kind of going back to your previous question, which is why why are we doing this one? It's because they're already the motivations in place to adopt these practices. But you are so correct that they face startup costs in order to make this transition. And in the U S it's even more complicated, certainly apply to other countries. But in the U S we have a very robust crop insurance subsidy program. So in order to qualify for crop insurance which basically says if you at its simplest, if you don't grow a certain amount of yield and, and don't sell that for certain pricing or something, the federal government intervenes and they'll provide a payment so that the farmer receives a sort of minimum amount of money. Now in order to qualify for these programs, the farmers have to adopt very prescriptive practices. And those practices are not the same things as these regenerative practices. So if you're a foe and you are kind of stuck in this cycle of always needed to make sure that you're going to be able to get paid through this insurance, then it's a big risk to reject the insurance program and then go try to adopt these regenerative practices on your own. So that's why farmers need a financial incentive. They need to get paid though. And the right way to do that is to pay them for storing carbon in their soil. So that's the role that Nori plays, is we're connecting these different participants, farmers who want to switch to these practices but can't afford about additional payments. And then on the other hand, you have like businesses and duals who want to pay for removing carbon from the atmosphere. It's a perfect match. And Nori is doing the challenging work of making sure that what the farmer is doing is getting measured and verified appropriately, and we facilitate the payment between the buyer and the farmer.

Dragos: (27:32)
Perfect. That leads me exactly into my, my next question. So okay, let's start with the first one. How do you, like, how do you actually ensure the accuracy in terms of the carbon that is offset?

Paul Gambill: (27:46)
Yeah, so what we do is well let me back up and say that a lot of people have tried to do this before by implementing soil sampling which is typically pretty affordable when you're, when it comes to measuring things like phosphorus or nitrogen, but it's actually far more complicated and very expensive to do it accurately for carbon ducks [inaudible] the carbon that's going into soil. So soil sampling at scale less prohibitive. It would not work to do soil sampling. So what we instead do is we are partnered with a tool called COMET-Farm. COMET-Farm is out of Colorado state university, and they're actually funded by the U S department of agriculture. So this is basically the federal government's tool for measuring and estimating soil carbon. What they do is they have a reference network of soil sample sites around the country.

Paul Gambill: (28:42)
So they do the expensive and rigorous soil testing and then they've built a model on top of that. So you as the farmer can say, this is where my field is located, these are the practices that I'm doing on my land. And then comment can come back and say, okay, this is how much carbon you're putting in the ground based on the fact that you're adopting these new practices. So it's far more affordable and it's the most scientifically credible way for figuring out soil carbon at scale. So that's the, that's the platform that we use for quantification. And then there's another step which has to happen, which is, it's, it's like garbage in, garbage out, right? But we have to make sure that the data that the farmer is providing to us that gets run through this model is accurate and correct. So the farmer has to hire an independent accredited verifier to verify that the data that they're providing to us is true and accurate. Okay.

Dragos: (29:39)
That makes a lot of sense. And this all feeds into,

Dragos: (29:42)
Into the marketplace. So let's explore then how the carbon removal marketplace works in practice from both sides. Let's, let's assume I'm a company that I want to pay to remove carbon out of the atmosphere. How do I approach it?

Paul Gambill: (29:58)
There? There are a couple of different ways that we are sort of looking at this in today's market. One are just companies that want to remove or negate their emissions. So you know, a lot of companies have been taking efforts to transition over to renewable energy and that sort of thing, but it's really, really difficult to get carbon emissions from transportation in manufacturing out of their supply chain. So if you have a business that results in a lot of trucks being driven or people flying on planes a lot, like you just, you can't through efficiency measures, get rid of that, those carbon emissions. So what they're looking at is how to pay for removing those emissions. So that's, that's what we do for companies who, who want to offset their emissions in that way. And there's, there are a lot of companies who've been doing this voluntarily for a very long time and the number who are interested in that are growing at an exponential rate.

Paul Gambill: (30:56)
Another way of looking at it are companies who want to offer carbon removal as a sort of pass through to their own customers. And we are in talks with a few different companies can't name right now, but imagine like a banking app where consumers can, can go into the app and they see all of the different purchases that they've made recently on their debit card or something. And they can see that, okay, I paid for this flight, I paid for this tank of gas and, and that sort of thing. And what we're, what we're trying to build for them is an API to plug carbon removal in so that as they're looking at that line item for the airline flight, they could just pay for removing those emissions. Right there in the app. [inaudible] So we're providing a verified, a carbon removal is transparent because anyone should be able to go back and see exactly what they paid for. So who did the removal, how it was verified, where it happened, when it happened, that sort of thing. And we put all of that on our website and on the blockchain.

Dragos: (31:59)
That's really cool. Okay. We need to, we need to go into the the blockchain element here. And I guess I'll, I'll keep my question about financial incentivization until we talk about that. So why, why is it that you're going for blockchain approach and it's not just the normal marketplace?

Paul Gambill: (32:20)
Well, I'm going to let you in on something that most people don't want to talk about publicly, which is the fact that every single carbon offset credit that has ever been sold internationally has been double counted, literally every single one. Oh, wow. Yeah. And that, that's how was set up from the beginning. Going back to the Kyoto protocol. So the way that it works is, let's say that a company in France wants to pay for offsetting and submissions and they pay a, an offset provider in Brazil for doing something with forestry. Well, because that project happened inside Brazil, Brazil is going to count that as a carbon reduction against this overall carbon budget for the international reporting. And then when the company in France takes ownership of the carbon credits, France is going to count those as a carbon reduction against its own international carbon accounting.

Paul Gambill: (33:16)
So both countries are counting it, but it only happened once and that's a [inaudible] it's sort of like boggled my mind when I learned that best, how that worked because like why would anyone do it that way? Unless they were setting it up for [inaudible] for fraud, which is basically what they did. So the simple solution to that problem is double entry bookkeeping. It's been around for hundreds of years. It's a pretty reliable method of accounting is what we should do for carbon as well. And that's where the blockchain, yeah. So what we're, what we do is when someone purchases carbon removal in our market it's immediately retired. And that's carbon market language. That means that it's no longer tradable. Because here's the other problem. Most carbon offsets are sold many times and then sometimes they're eventually retired. But what happens is, let's say you have a project developer and they do some sort of carbon offset project and they're issued credits and then they sell those typically to a broker.

Paul Gambill: (34:21)
And then the broker might resell into another broker and then they sell them to a company and then that company might sell them again. They might go to an investor who's spec. Yeah, just a speculative investor and so on and so on. And these carbon credits are getting sold many, many times, but it's the same ton of CO2 getting sold over and over and over again. Now, the reason that the markets work this way is for good reasons. It's because the original market designers wanted to create a commodity asset that can be traded in commodities markets and commodities. Markets are really good and really important because they bring in liquidity. And can help drive more market activity overall and they help smooth out price volatility so that pricing could be more predictable over time, which makes it easier for businesses to enter the space on both supply and demand side.

Paul Gambill: (35:12)
So commodities markets are good, but trading the same ton of CO2 over and over again is bad. So we are unique in that what we do is when the buyer purchases a ton of CO2 from a farmer, it becomes immediately retired. That buyer can never resell that ton of CO2 and we can enforce that on the blockchain. So it's another really useful aspect of the blockchain. What the happens though is we still want a commodity asset for the commodities traders to trade because you get all those other benefits. So that's where the Nori token comes in. So the Nori token is just a medium of exchange. It's the payment method for paying for one ton of CO2. You can sort of think of like a token, a Nori token, like a gift card for one ton of CO2. That's because one token will always remain at the fixed exchange rate of one ton of CO2 per token.

Paul Gambill: (36:11)
So a buyer would pay a farmer, let's say the buyer wants to pay for 100 times. So they pay a farmer 100 tokens and then the farmer has those tokens and they could go sell those in the open trading markets, the crypto markets and convert them into cash at whatever point in time makes sense for them. So we've solved the double counting problem by doing the retirement. And now we've reintroduced the benefits from commodities trading by using the token. And that introduces a whole bunch of different other possibilities for both sides of the market. Let's say you are a business and you know that you're going to want to remove 100,000 tons of steel to every year, but you also know that the price of CO2 is fluctuating and you want you to SAP something predictable so you could purchase 300,000 tokens. So three years worth of tokens today, lock in the price that you've paid for them, and then use those tokens over the next three years to pay for removing the emissions that you need so you get more pricing predictability. Same thing goes on the farmer side. Let's say that they they need startup capital to or to do this, and maybe a, an investor pays says that they'll pay them a fixed fee of like $5 per ton and they're going to take the tokens and then they're going to use the tokens to realize the potential return on their investment. So we're just creating the financial infrastructure that makes it possible to build a robust a market with many different players serving many different types of needs in a carbon removal market.

Dragos: (37:53)
That sounds awesome. So for, for our listeners, it's really comprehensive and I actually understand exactly why you're doing things to where you're doing. It's pretty ingenious, but can we explain just for one second to people that might not know where the value of blockchain stands? Just very, very basic level. Why? Because that's what Bitcoin does as well. Right? Like that's the revolution behind Bitcoin.

Paul Gambill: (38:16)
Yeah. So it goes back to the concept of scarcity. Like if if I grow a 100 apples and I sell 50 of those apples to you, then it's very obvious that I no longer have 100 apples. I only have 50 apples because you can physically see them. They're tangible. But prior to about 2008, there had always been questions about how do we implement scarcity in that way. I, when it comes to digital stuff like how can you, yeah. If you're just able to like copy digital files like control C control V kind of thing, how can you prove that something that exists purely digitally is unique and it's not just a copy of something else. That was the problem that Bitcoin solved when it came out is by using some very complex math that we don't need to go into at all. We're able to where we're able to prove the uniqueness of something that exists only digitally.

Paul Gambill: (39:22)
So when it comes to a certificate, a that represents a ton of carbon being removed from the atmosphere, that's also a digital asset. A digital thing because we can't see carbon dioxide, we can't smell it. You can't touch it in a like really tangible way. So we have to represent these things digitally. [inaudible] By representing them digitally, we get all sorts of benefits cause it's, it's much easier to build software on top of that. And then software is how we [inaudible] embed carbon removal into everything that we do. So we need an [inaudible] a way to be able to prove the scarcity, the uniqueness of a, a certificate of carbon removal. So that's, that's what blockchain does for us is it's a, it's a transparent public ledger of activity that everyone can trust because everyone sees all the contents of it. Like there's nothing hidden or secret about it. Exactly. And

Dragos: (40:19)
What my next question is, and what I would kind of want to add to that is you also have, and correct me if I'm wrong, you also have another token which you use to represent each time of CO2, which is a non fungible token, which means that it's not, it's not, you can't divide it. Right. And it's unique. So it's kind of like, I'm like the baseball collector cards, right. So that, that token, the CRC, I think you call it,

Paul Gambill: (40:47)
We actually have rebranded that recently. So it's, it's the Nori carbon removal ton or NRT

Dragos: (40:54)
Gotcha. Okay. So that's the, okay. Now ready to move on from there.

Paul Gambill: (40:57)
The physical, that's the actual carbon. So if a farmer removes 100 tons, we issue 100 NRTs to them and then the farmer sells those 100 NRTs to buyers and then the buyers own the NRTs and the NRTs are owned by them forever. They can never resell them.

Dragos: (41:16)
Gotcha. And basically each of those NRTs points to one ton of CO2 being removed. And it's provably the key words being it's their provably unique. So there's no way they can be double counted.

Paul Gambill: (41:28)
Yeah. And not only are they provably unique, but we also provide other information about them. You could go on our website and see exactly who was the farmer who removed those

Dragos: (41:39)
When you encode the data on the blockchain, right? Yeah. So basically each token, okay, wow, okay, I get it now. There's an extra layer to it. That's, that's brilliant. That's cause you know, like me being in the blockchain space for three years, I've seen so many token models being forced and so many tokens that make no sense and they shouldn't exist. But this actually makes a ton of sense and this actually solves a very important issue when it comes to the double counting or many, many times more over counting of the CO2 being removed. That's the goal. It's pretty cool. So, okay. I, I guess the important question here is does this introduce, I mean it doesn't introduce unnecessary friction from everything that you've explained, but do you think that the blockchain space needs to mature and to improve its user experience for people to adopt this because you're going to be dealing with people that are probably not, not as technical as we are. And even for us right now, blockchain is a pain. Like you have to operate it with ledgers. There's like th the UX is just super, super poor. So is that a prerequisite for your platform taking off?

Paul Gambill: (42:53)
No. No. So I first discovered Bitcoin in 2010 when a professor in grad school told me about it. And I remember reading the Bitcoin white paper and thinking, Holy cow, this is, this is the solution to a lot of serious problems. And since then it's been the it's sort of like the early days of the internet where a lot of the people working on this stuff are also software developers and engineers and mathematicians and so on. And so there hasn't been as much of a focus on like really high quality and delightful user experience. We want, we don't want anyone to have to learn all about how blockchain works in order to use our platform. The, the dream of, of the blockchain community, especially from all of the applications that came out in 2017, was that blockchain should just be a background tool. It's just a way to implement some useful features.

Paul Gambill: (43:51)
And in the same way that most people don't really understand how their web browsers work, but they know that if they type in a [inaudible] a URL, they're going to get the webpage and they can start interacting with the platforms that way. That's exactly how blockchain should work too. So for us, the ideal user experience and what we've been building is anyone can just show up and put in a credit card and pay for carbon and the token stuff all happens in the background. If you want to be an advanced power user you certainly have the ability to do that. But you don't have to if you don't want to. And for farmers, they should just be able to click a button that says, okay, you have 45 tokens in your wallet right now, convert those into cash and you click button and then it runs through like one of the background exchanges and then deposits cash into your bank account. So we want to hide that away. Blockchain shouldn't be something in the forefront or requiring people to learn how it works. It's just a tool for storing data.

Dragos: (44:48)
Yeah. And that's exactly what I meant. That right now with loft services and lot of stuff that's happening in the blockchain space, you don't have that. That's simplicity yet,

Paul Gambill: (45:00)
Right? Yeah. Yeah, I agree. And it's, it's actually quite frustrating because it, it seems like a lot of the attention in the blockchain world is being placed on other like blockchain infrastructure projects and what we really need are more applications like Nori that are using blockchain, but making it accessible and easy to use for people who don't have that same background of experience.

Dragos: (45:24)
And I'm assuming, and I might get too technical here and people who just listen to this for the climate talk, I will not really understand, but I really want to ask this question. Basically, you guys are, you're an Ethereum token, correct? That's right. Yeah. So you're using the Ethereum network. So presumably once the three of them gets to second iteration and it actually scales, that will help you because I assume I would assume all these you know, like moving the tokens, the farmer, actual purchasing, that all of these would be transactions on the Ethereum network,

Paul Gambill: (45:56)
Right? Yeah. But we're, we're, yeah, yes, correct. But we're not one of those like super high volume transaction sort of applications. It's not really that big of a deal or a big of a cost for us to do the blockchain rights that we have to do right now. What will be more exciting about the Etherium 2.0 transition is the idea of moving to proof of stake so that there will be significantly less energy usage in order to run and maintain the blockchain. So I get asked that question a lot which is like, doesn't blockchain use a lot of energy in order to run? And the answer is, is yes. Although it's not really clear right now. Like say Bitcoin for example, it's not really clear how much of that energy is, is coming from a renewable sources.

Dragos: (46:43)
No, it's about 70 to 80%

Paul Gambill: (46:46)
From renewables,

Dragos: (46:47)
From renewables because it really makes sense because the energy, I mean there's this people that have large mining farms in places like Iceland and all that because renewable energy is much cheaper and the costs, they really need to work on the costs for the mining to still be efficient because the competition, I'm not exactly sure if that's an accurate figure, but that's what I've read.

Paul Gambill: (47:07)
Yeah, I mean it, I, even if those numbers aren't correct, like the general trend of the market is, is correct. Renewable energy is less expensive than building new coal or gas fired power. So the market forces are already bringing down the cost of renewables and like you said, people who are running these blockchains are incentivized by costs. So just going to use the cheapest energy, which is more and more becoming renewable. But setting that aside, if theory is transitioning to proof of stake, which is just a mechanism for proving the uniqueness of all of the transactions and it will be a simulated in software rather than running on real physical hardware. So that's going to really, really, really, really cut down on the energy usage. So I'm really excited about that transition. I think it's it's going to go well. I have a lot of faith in the developer community in the Ethereum network and and that's going to make what Nori is doing a [inaudible] an even better option because the infrastructure that we're built on will be far less carbon intensive.

Dragos: (48:12)
Yeah. Look, I'm, I'm 100% in agreement with you actually went to a Def con four in Prague about a year ago. So I'm all about, I'm all about the theory of community. Briefly, can you, can you explain the difference between what you guys are doing and other blockchain companies that are trying to do the same thing like [inaudible] or carbon X?

Paul Gambill: (48:35)
Yeah. what those companies are doing are just tokenizing existing carbon offsets. So all of the same problems that I was talking about with like the international double counting and the additionality questions. And is this actually doing anything? And even if we are doing it, it's not removing the past emissions. All those problems still exist within those other blockchain based applications. We're unique in that not only are we creating better market infrastructure, but we're [inaudible] also creating our own new carbon removal assets that will be sold in that market.

Dragos: (49:07)
Okay. That's pretty cool. And what stage are you guys in right now in terms of when are you launching your marketplace? What are kind of the moves and what's on the horizon for the next few years?

Paul Gambill: (49:20)
So we've already launched it, we began taking presales for the first farm project back in October of last year. And and right now what we're working on is scaling up the supply side. Getting more farmers enrolled. I cause this is very much a supply constrained market. There is plenty of demand out there. We need to get more supply available. So that's what we're working on. In the first part of 2020 is getting more supply available and ready to go. But people can go to [inaudible] dot com and, and see the projects at bear and see what's available for them to pay four. Okay.

Dragos: (49:59)
Okay. And in terms of the token, is it actually lists, like is it liquid, is it listed on an exchange or do you not need that right now?

Paul Gambill: (50:06)
No. So that the token is not trading on public exchanges yet. We are trying, we're taking a multi step, a plan to get the torque and incorporated into the way that payments are happening. So there, there's this chicken and egg problem that always exists with, with tokens, which is he exchange exchanging is wanting to see the token being in order to feel comfortable that there's going to be trading demand for it because they make their money off of transaction fees trading. And in order to get the token used, we need to have the token has some sort of a pricing attached to it so that the people using it are doing that. So we're, we're working in our roadmap right now to get the token incorporated in a way. So that buyers pay cash and then tokens are delivered to the farmers and then until the tokens are trading on exchanges we'll let the farmers sell those tokens back to Nori for a cash amount. Got it.

Dragos: (51:04)
And is how do you guys stand regulation wise in the us? Your us space, right?

Paul Gambill: (51:11)
Yeah, yeah. Right. We're an American company. We thought it was really important to be based in the U S because that's where a lot of our customers are. We believe very strongly that this is a utility token.

Dragos: (51:22)
Yeah, it sounds a lot like it. Yeah.

Paul Gambill: (51:24)
Yeah. [inaudible] You use it to pay for a carbon. It is not a, you're not getting like dividends from it is, it's just, it's not a security. So that's, that's all right position on that.

Dragos: (51:37)
Yeah. That's a really good use case for utility token. And I was about to say, you know, all these, all these exchanges from my experience, like the tokens are traded, I would say 99% of the motivation is pure speculation. There's no actual use for those tokens.

Paul Gambill: (51:54)
Yeah, yeah. And, and we think that that needs to be flipped on set and we need to make the tokens very useful. Yeah.

Dragos: (52:00)
Adoption is coming as they like to say. One last question that I didn't ask before, but I wanted to ask it now. So I guess the whole, the whole reason why the marketplace would take off. And, and why would it be beneficial is you're basically betting on incentivizing people financially, right? Because once there is more demand, the token appreciates in value, which means the farmers will earn more per ton of CO2 that is removed. And it becomes more expensive for companies to pollute. So in a way, and incentivizes the companies to, as you said, you know, purchase 300,000 tokens in a transfer three years. Because they anticipate that the price will be lower now before everyone becomes a aware of it. Right?

Paul Gambill: (52:44)
That's exactly right. Yeah. The, if the question is there, okay, there are too many greenhouse gases in the atmosphere. So then the next step is we have to remove those gases. And then the question is, how do we get people to remove them? And the answer is we pay them. And then the, then the next question is, how do we get more people to remove them? And then the answer is we pay them more. So the whole goal behind what we're doing is to try to a, create a market where people are getting paid more and more in order to remove carbon from the atmosphere. So that's what we've designed our token economics to, to attempt to do.

Dragos: (53:23)
Gotcha. And how does this up with other carbon removal marketplaces and carbon removal services? I guess once there's like price, price discovery, yeah, go for it.

Paul Gambill: (53:35)
Well, one of the problems with the existing carbon markets, just in general, whether they're offsets or removal. And there, there's really only one other group out there right now that is doing any sort of market around carbon removal. And it's very, very small scale. Mmm. The one of the problems is the pricing is very unclear and not transparent at all because a lot of times, a lot of the entities in these markets are doing off-book swaps with each other. So there is no necessarily visibility to the public of the transactions that are happening. So we, we think it's really important that there be a global reference price for carbon and that's, that's what the, the role that the Nori token serves. So if one token is always worth one ton of CO2, then whatever the trading price of the token is, should be looked at as the carbon price. And that's useful not only for participants in the market, but also for others who just want to understand and like maybe forecast or for policymakers who just want to know like, what is the market bearing for carbon. The more readily available that pricing information is, the more activity we will see in terms of new investments in research and development, going into developing carbon removal technologies and businesses. And so on. That is how we accelerate the rate at which we draw carbon out of the air is by providing very transparent price discovery.

Dragos: (54:59)
Gotcha. That makes a ton of sense. And it's very clear. Good. So just one last question. I don't want to keep you for too long. I ask every guest on the show to kind of rank the following sectors in order of importance to tackling climate change. So just rank them one one through four and I'll explain each of them and why I do this. So first one is politics and policies. So government's incentivizing renewables as an example or stopping fossil fuel subsidies and all of that. Second one is society. So it can be activism, civil disobedience or individual lifestyle changes. Third one is businesses. So businesses emitting glass actually paying for carbon removal. I'm funding the fossil fuel industry less and so on. And then the fourth one is scientific research and innovation. So you think about it in terms of breakthroughs in energy efficiency battery costs going down or you know, different innovations in nuclear. Which one? D, which ones do you think are the most important and why and how would you rank them?

Paul Gambill: (56:08)
Yeah well I would say that businesses are number one most important. The, the vast majority of all carbon emissions are the result of commercial activity. And so businesses have a to deal with their emissions. It's like sometimes we we equate carbon emissions to a [inaudible] garbage problem. It's like when you produce garbage or waste, you're, you're responsible for that waste being collected and stored responsibly somewhere. But we're not doing that with carbon emissions right now. So businesses are number one and they can they can be the most nimble in, in driving stuff forward. I would say, yeah, politics and policy probably is number two in terms of the most importance, but they're dead last in terms of what I expect to actually happen. So, I mean, policymakers have, have known about these problems for 30 years or more and they have done basically nothing.

Paul Gambill: (57:10)
So I don't really expect much from them. In fact, the things that they do make the problems worse. I'm really glad that you mentioned fossil fuel subsidies, like that would be amazing if we could get rid of fossil fuel subsidies. But it's never going to happen. Subsidies don't ever go away. So we, we have to work around that somehow. Mmm. I do think it's important that and the best, the best policy that anyone could do would be to go to the producers of carbon emissions and say you have to reduce the amount of carbon precursor content in your supply chain by X percent every year for the next Y number of years. And then the men market forces would figure out like, what's the most efficient way to do that? But if they just said, like, you have to reduce the amount of carbon that you're emitting, just figure it out.

Paul Gambill: (58:01)
I don't care how you do it, just do it. Yeah. That's the most efficient policy that would, that would be effective. And it's, that's the exact same policy that we used internationally for getting rid of chloroflurocarbons. The, the stuff that caused the hole in the ozone layer, that's how we got lead out of gasoline. That's how we solve the acid rain problem. It's, it's sort of curious to me that we're not taking the same approach when it comes to carbon. I think there are a lot of different, yeah. Possible reasons for that, but that, so that's what where policy is. So I'd say business first and then policy second third. Especially when it comes to better energy, I would love to see cheaper nuclear power. That's just the, just the fact of the matter is solar and wind are not gonna cut it.

Paul Gambill: (58:47)
They are not large enough in scale. They, there are problems of energy storage. It's a, it's not how we scale this thing up as rapidly as we need to. We absolutely need nuclear power and to make it more cost effective would be really efficient. And then I would put society forth mostly because like the individual lifestyle changes that you as an individual make are basically meaningless. [inaudible] Yeah. The things that society can do is put pressure on the businesses and put pressure on the policymakers. But I don't expect that to, on the policymakers and the businesses is that is useful. So consumers are right. All right. Businesses are responding to consumer demand. So I, I think they're sort of like linked in there, but in terms of like, if you're choosing to fly less and eat less meat, that's great. But th there's just no way that enough people are going to take that altruistic behavior. We have to find other financial incentives in place to get people to do the things that need to happen.

Dragos: (59:52)
Yeah. I'm, I'm very much in alignment with you and that was like very short and to the point and very good way of ranking them. Awesome. Thank you. Yeah, thanks a lot. Is there anything else, like where can people find out about Nori? I know you guys have two really good podcasts as well. If there was something that you wanted to say to listeners, like where should they check you out or what should they look at?

Paul Gambill: (01:00:16)
Yeah. So go to nori.com that's in O R i.com. I, I love that you mentioned a podcast. We have two one's called reversing climate change and it's sort of long form, just like this was maybe about an hour and we interview different people in the space who are working to reverse climate change. And then the other one is a short forum podcast called carbon removal newsroom. And that's about current events. So we're interviewing people who are involved with like anything that's kind of happening in the news around carbon removal, typically like a 10 to 15 minute episode there. All right, so go check those out. You can find everything about if you want to learn more about how Nori works and like some of the fundamentals behind the market or are you want to learn about the verification procedures and you can find all of that at [inaudible] dot com and that's also where you can pay for removing your emissions.

Dragos: (01:01:06)
Awesome. Yeah, that's something that actually every listener can do right now. So, yeah, that's one, that's one way in which we can actually take a individual action. You know, it doesn't matter that much in the grand scheme of things numbers wise, but it does matter. Let's say ideologically and kind of convincing other other people that you're, you're actually serious about about climate change. Yeah. Yup. Awesome. Thanks a lot, man. It's been, honestly one of the, one of the best episodes that I've done so far. I really enjoyed it.

Paul Gambill: (01:01:39)
Thanks. Yeah, I really enjoyed this too. You ask good questions.

Dragos: (01:01:44)
[Inaudible]

Paul Gambill: (01:01:44)
And I, and I love the synthesis of blockchain and climate stuff. I think it's really fun to have to sit at the center of those two things.

Dragos: (01:01:52)
Yeah, I agree. I agree. I agree. All right. Well, we should do this again sometime soon until then. Take care.

Paul Gambill: (01:01:59)
Thanks for having me. Bye.