Season 4, Episode 4: Turning waste into a building block of the low-carbon economy

Elena Lambros
Hello and welcome to ESG Matters at Ashurst Perkins Coie.

I'm Elena Lambros, a risk advisory partner at Ashurst Perkins Coie. You're listening to Season Four of Game Changers: from innovators at the cutting edge of technology, to impact investors funding a cleaner energy future, each and every one of our guests is changing the game in their field.

In today's episode, you'll hear our conversation with Steve Greig, CEO at OCO Technology, a global clean tech company which transforms thermal residues through an innovative carbon capture process, and permanently stores carbon within a sustainable, lightweight aggregate for use within the built environment. With 17 years in carbon and 22 years in banking and insurance, Steve is an expert in commercial leadership, carbon capture, the circular economy, and corporate finance.

Today, we're talking about how to unlock capital in the low-carbon economy. Let's jump into the discussion…

Elena
Well, welcome to the show, Steve! Thanks for joining us.

Steve Greig
Thank you, Elena. Pleased to be here.

Elena Lambros
I thought I'd start by just talking about the fact that you've built a commercially successful business for the low carbon economy. Could you maybe just talk us through how did you get here, and how does OCO generate value from carbon capture, waste treatment, and sustainable construction products?

Steve Greig
My background is finance, and on my journey, I came across a lab-based business that was playing with carbon dioxide, and I saw a unique opportunity to solve two massive environmental problems simultaneously: one being industrial waste that is normally destined for landfill, and the second carbon emissions.

I was drawn into the physical reality of the technology. We're just not offsetting carbon on a spreadsheet. We're locking it into building materials that you can hold in your hands, and the chance to help transition a heavy traditional industrial industry towards a circular economy was just compelling. So the challenge was: How do you take a lab-based technology and make it into a commercial reality? That was the challenge.

Elena Lambros
That is definitely a challenge, and I love the idea already! So talk me through how you change “urban lab-based” into “commercial”.

Steve Greig
Through scaled trials. Predominantly working out how to take what was a simple desktop application to to commercial scale. Whether it was a single stage process, whether it was a multistage process, how do you turn it into a production facility? And it was just through scale trials and errors, and many hours spent trying to trying to make that happen.

So in simple terms, we take an ash, we add water and carbon dioxide, which chemically and physically treats that material, and then we add binders and fillers – typically sand and cement – which creates an aggregate, because we capture more CO2 than we use in the manufacturing process.

We have two choices with our carbon: We can either sell our aggregate as carbon negative, or we can de-link that and sell our carbon credits separately on the market. And at the moment, the construction industry is moving more towards recycled materials and low-carbon materials, but purchasing carbon-negative materials is just a step too far for the construction industry right now, and that's why we de-link that and sell our carbon credits separately to normally, or more commonly, national and international corporates.

Elena Lambros
That does sound very simple. That's a pretty amazing business that you've built! And now – [after] you were talking about the story of where it's come from – you're now expanding into international markets, including the launch of a joint venture here in Australia. Which customers and partners are joining you on that journey, and how has your technology supported this growth?

Speaker 2
In the UK, we built our business on the back of energy from waste because we provide a solution for that for their residues, which allows them to be almost 100% landfill divergent, and we've been successful in exporting our technology to Japan, Europe, and more recently North America.

Australia has always been super exciting for me. It's a country that is growing both in economic and population terms, and in today's climate, one that's relatively stable geopolitically. Its landfills are filling up fast, and Australia is currently looking to transform to energy from waste as one of the most sustainable ways to deal with population household waste growth without the need for more landfills.

But Australia is also known for its super quarries, and quarries are not limitless. The construction is industry is starting to look at an ever-increasing amount of recycled materials, and our vision over time is that they will start using low-carbon materials.

This was also seen by our joint venture partners in Australia, City Circle, who are a leading player in that field already. And as a family-owned business, they share many of the values that we have, and are very much a natural partner.

So we see a huge opportunity for our business in Australia, not just through energy from waste, but through the application of our technology for a whole host of different aspects, whether that be the mining industry, the cement industry, or the steel industry.

Elena Lambros
Yes, and you've just mentioned quite a few industries there at the moment that I know when you were talking about decarbonisation and what that would look like, it's always the – I would say – the typical hard-to-abate sectors, really heavy industry things like that. Have you seen kind of a lot of interest in some of your technology? Particularly around the simplicity of it and the scope to try to change that? Is there quite a lot of appetite, either here in Australia or from other markets that you've worked in?

Steve Greig
There is. I mean, most businesses, most industries are talking about carbon capture at some form or scale, and therefore, as soon as you say you're a carbon capture business, then there will be interest.

I think the challenge is scale.

So one a good example: I went to a quarrying business in Australia, and I was talking through my technology, and their response was, “Well, can you deal with a million tons?” Well, I can't deal with a million tons right here, right now. I can deal with X amount of tons, but over a period of time you can scale up.

So yes, it is possible, but we're not the complete solution for industries. It is a there's a myriad of different things that need to be happen for those big industries to be fully carbon neutral or carbon negative even.

Elena Lambros
Yes, I mean there is there is quite a lot of challenge, but it's good to be part of the solution along the way, and that probably leads into the other question I was thinking about: What are some of the other bigger challenges? Or if you're looking at companies are looking to increase their profit, but they really want to reduce their carbon intensity. What are some of the major challenges along there?

Steve Greig
I think there's three for us. There's been three main challenges.

The first is the regulatory hurdle. We often take a waste and make it into a product, and that takes time to take the regulators on a journey. So regulatory challenge, and that's different in each country we go to, in each state we go to.

Industry mindset is the second aspect. We make an aggregate, which is a manufactured aggregate. The construction industry is used to using quarried materials, and quarried materials are well known and well used. And clearly, when you turn up with a manufactured aggregate, that poses a lot of questions, and especially when it comes from a waste product.

And I think the third aspect is simply the capital intensity. How do you raise the funds in order to build these facilities? We have three facilities in the UK. We have a facility in Europe. We have three in Japan. How do we scale on an industrial global scale across America and Australia?

So all of those are challenges. And I guess our success is simply tenacity. The Australian market we've been looking at for nearly five years, and it's really trying to break down those barriers and using simple language in often complex scenarios to make the point heard.

I think the wider perspective on challenges: If I look outside of outside of my business, when I look at other companies, is simply the use of AI. Every company in the world is looking at the use of AI and how they can use that to become more efficient or increase production.

But what a lot of companies don't actually recognise is the energy consumption for the use of AI is so much more than a Google search. If you used AI to do something, it's probably 1.5 times the use of doing a Google search. And if you're using more complex algorithms, then the energy consumption is quite huge.

So carbon reduction shouldn't mean increased cost. It's really quite the opposite. It's more about reduction of consumption, review of supply chains, using renewals wherever possible, and adopting a sustainability framework and ethos in the business.

Elena Lambros
But it is it is really quite positive to see that when you talk about your tenacity and some of your successes. I mean there is quite a few jurisdictions that you've mentioned that you are working in, and all of them would have different regulatory environments. So obviously there is commitment coming. So hopefully that kind of will increase for that ability to scale and deliver from a global perspective. Particularly when talking about AI and the energy consumption that's coming through there.

One thing I was also thinking is – when we've spoken, when you and I have caught up previously – we spoke a lot about the way people think about “additionality” and how they might best demonstrate to investors that they have achieved this through carbon capture. Were you able to explain, rather simply, what that actually means and what investors should be looking for in terms of that concept?

Steve Greig
It's a simple phrase, additionality, but actually is a very complex and emotive subject.

In simple terms, additionality means proving that the carbon removal would have not happened without the financial incentive for setting carbon credits on its simplest terms. Investors look for transparent financial models proving that the carbon credit revenue was the critical turning point that made the green project economically viable.

But for OCO, the credits are a massive growth accelerator. They provide the financial leverage needed to build multi-million-dollar facilities in new regions.

It's a tricky one because you know every business needs profit as well, and you just need to weigh up the balance between what a business makes from profit and how much the carbon income represents of that profit.

Elena Lambros
Yeah, so that's thinking through what you're going to get from that carbon credit versus what the investment is, which would be a sensible financial choice. But really interesting to see that that focus on it, when you start talking about additionality, and then you start talking about carbon credits. There is always a conversation around whether that's real, and quite recently in Australia we saw a high-profile case with the fraudulent use of carbon capture funding.

How do you think we could protect the carbon capture sector from the same perception that's kind of impacted the carbon offset sector?

Steve Greig
Certainly, and this is where I see the key and fundamental challenge to the definition of additionality as it currently it is. And my fear from a personal perspective is that this definition or hurdle is just too narrow, is too restrictive.

The world is an old place, and there are many businesses and industries that are where they are, many of which started way before the world of carbon. And if we want change and change fast, without government or taxpayers having to fund incentives or schemes, then we need to develop this market, and it needs a different approach.

And let me just talk you through that a little bit more. You know, at startup or during growth, the additionality hurdle is clear and obvious. Credit revenues directly fund expensive first-of-a-kind plants like ours. But at steady state, it becomes more complex, and a business needs to become more sustainable and profitable as it goes.

At the moment, carbon credits have can only be applied for 15 years of your new facility. What happens at the end of 15 years? Do you then shut up shop, make people redundant? There has to be an interplay between profitability and carbon. It has to be sustainable, and you know carbon credits are a new market commodity, and the finance industry is quickly becoming attuned to them. But going into a finance industry and asking them to fund a project, a plant for 15 years on the back of carbon credits and carbon credits purely, is a difficult ask, and that finance institution will say, “Well, what will happen after 15 years when you don't have that carbon income?” So, the interplay between profit from a business and profit from carbon needs to be rethought through.

Elena Lambros
Yeah, I would agree. They're all really good points. When they look forward a bit, which carbon removal scheme do you think will gain the greatest traction over the next few years?

Steve Greig
That's an interesting question. I mentioned trees. And whilst I love trees, we simply can't plant our way out of this challenge for sure. There are many different carbon removals on the market right now, and it's such an exciting sector to be in with all manner of different people trying different things to use carbon. And there's not a silver bullet. There is there really isn't.

You know when you sequester carbon in the seabed or in geological stores – that's great, you know, that's good for volume, but there is a finite capacity to this. And equally, and forgive my language, you know what happens when “the world burps” and all this carbon is potentially re-released?

So for me, there there's two main aspects for me.

One is focus on renewables. We need to do more to harness the world's natural energy, whether that be solar, wind, or wave.

And if I can use an example, take Morocco as a country for example. After 2008, the financial crisis, oil jumped to $150 a barrel. Morocco, this relatively small country with a population of 38 million, had 90% of its imports from others to fuel its energy, and whilst it already had started on its hydro and wind journey, it accelerated solar in 2000 from 2008, accelerated solar. And now Morocco is one of the few countries that will meet the 2030 climate change [target of] 52% from renewables. And that's a country that's often not talked about, but is actually leading the way in in moving towards renewables. And China is following very quickly.

And you know, don't get me wrong. I'm not against trees. I love trees, but if you look at it in a narrow field, you know, a solar farm is better than a tree farm in in lots of different ways.

Secondly, for me, the most important is education. Education for businesses, but also for individuals. That's the key for me.

Elena Lambros
Yeah, I think that really is key, and so interesting to hear about different examples where things are working well or where that's unexpected, like Morocco growing massively around solar.

So now I think about OCO and what you do, and I really kind of think about it from carbon capture, waste treatment, sustainable construction – it's such an important part of decarbonisation and thinking about where the world needs to get to.

What would you leave listeners with? Some words of wisdom? What advice would you give a company who's either trying to get to carbon neutrality or an innovator building the next pathway to a low carbon economy? Any advice?

Steve Greig
Yes. Firstly, buy our credits!

Elena Lambros
[Laughs] That's good advice!

Steve Greig
They could do that! But on the serious point:

For companies, prioritise deep internal emissions. Cut first, and then look at high quality permanent removals for the rest. And just don't settle for cheap, low integrity offsets that risk your brand reputation.

For innovators, ground your climate tech in a commercial reality. A brilliant scientific breakthrough only saves the planet if it can scale as a profitable and sustainable business.

And for both, you know, collaboration is everything. The transition requires the entire supply chain to take that leap together.

But for me, the most important point is education. The Paris Climate [Agreement], says that we need to – in order to reach the target 1.5 degrees – we need to save anything between eight and 10 billion tons of carbon per year by 2050, which is a colossal task. [So] for me, if you can educate individuals, if you can use carbon in education to inform their decision-making processes, that could make a huge difference. And let me just quote you some statistics which may bring that a little bit more alive. If you said the average carbon footprint of a person is around five tons per annum, not many people know that.

Elena Lambros
Some people would probably be surprised that their carbon footprint is that high!

Steve Greig
Yes, and if you said, “Well, okay, in Australia it's 15 tons per person (similar to the US, Europe's about seven) and if you said there's 8.3 billion people in the planet, and if every person on the planet could save 10% of their carbon footprint per annum, that's 4 billion tons of carbon a year.” That's half the journey. Now that's at a very big scale, but actually simple decisions and simple choices could actually influence and help on the journey towards carbon neutrality.

Elena Lambros
Thank you. I'm going to wrap it up there. I've really loved hearing about your business, your journey, and the advice. At the end, you've managed to put it very simply. I felt like I understood it, so I'm sure our audience will as well. Thank you.

Thank you for listening to this episode of ESG Matters at Ashurst Perkins Coie. I hope you found this episode insightful.

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