Offsetting carbon with batteries with Emma Konet (Co-Founder & CTO @ Tierra Climate)

What we found, actually, is that we looked at all the all the batteries operating in twenty twenty two as well as twenty four batteries. Only five of them actually reduce emissions. The rest of them, cause emissions to go up. And it's it's Wow.

I know. It's a little sad. I know. It's a little stark. But the good news is a lot of them have the capability to reduce So many of them do.

Many of them can can reduce it in emissions at a at a not so unreasonable price of carbon.

You basically, between fifty and a hundred dollars which sounds high for folks who are familiar with, like, the voluntary cover market and avoidance offsets specifically, but I think that the theory is appetite to pay in that To Europeans, it just to Europeans, it sounds totally reasonable.

We have a couple.

Oh, okay.

And and that sounds that sounds about right, you know?

Hello, everybody, and welcome back transmission. This week's episode was with Emma Conett, co founder and CTO of Tiara Climate. The conversation covers the carbon impact to battery storage, and what batteries can do to make a meaningful impact on decarbonization of the grid. If there are any topics that you'd like to hear us discuss on transmission, please get in touch and don't forget to hit subscribe so you never miss an episode. With that, let's jump in.

Hello, Emma.

Hi, Q.

Welcome to the podcast. Thanks for coming on.

Thank you so much for having me.

We'll jump straight in, Emma. How are we talking and and who are you and what do you do? Sure.

Yeah. My name is Emma Conette. I'm co founder and CTO of Tiara Climate, which is a clean tech startup that is looking to help grid scale batteries monetize their environmental impact through carbon offsets. And we also provide, software services, optimization services to support those carbon offtake contracts.

And what we're gonna talk about today is is quite unusual. The way that you guys are flipping the the way that we think and look at carbon and account of a carbon and how it really matters for flexible assets. Is, we're gonna jump down that rabbit hole in a second. But I guess, to to warm the audience up, if you've listened to our podcast before talking about carbon certificates and accounting and matching all those What we're gonna talk about today is gonna be a little bit different.

And I think the, hopefully, where we're gonna get to is that there is a different way of looking at this problem, which means that the whole system gets a lot more value and flex plastics have more value too. But, Emma, what's if if if you could just start at the beginning, What's going on with carbon in general and carbon accounting? And, you know, what what's the problem that we're talking about here? From the from the top.

Sure. Yeah. I think, you know, carbon offsets are a way for a company to reduce their emissions. Most most of the time they're used for to offset scope three emissions that are really hard to, to decarbonize internally. So that's like supply chain emissions, is are really hard to to get to net zero through internal action. So a lot of companies would will rely on carbon offsets too.

Reduce their carbon footprint to reach their, net zero goals or whatever their, climate goals might be. And we kind of think about carbon offsets on these two axes. There are avoidance offsets and removal offsets. And then there are Nature based solutions and engineered solutions. And carbon offsets can kind of fall in any quadrant along those two axes. And what we've kind of seen in recent years is the market move a little bit away from nature based offsets that are typically avoidance in nature. So that that would be a project like avoided deforestation in a developing country.

Before we jump in there, can we just talk about those four quadrants in more detail for a second?

Because I know it's second Hsu, but Sure.

So the we've got a matrix here, and it's a two by two. And what are the what what what's each one in in detail?

Yeah. Yeah. So avoidance offsets are where, someone is paying an emitter to stop emitting.

And, removal offset is basically when you take carbon out of the atmosphere and store it. So that could be, like, carbon capture project, mineralization, any type of project that actually takes CO2 and and stores it permanently.

And then when we think about engineer versus nature based nature based is, like, as you could, as you could guess, a lot of tree planting, forestry projects, things of that nature, and then engineered solutions could be something like an energy storage project or, you know, a carbon capture and sequestration part project, something that we physically engineer to to do the carbon removal activity or or or in some cases like ours, an avoidance activity.

And are these pieces of paper that are moving around? Or are these, you know, what is there a centralized systems? Is this government? Is it what what what Who sets the rules of this whole thing?

Yeah. There's well, there's a couple different flavors. We play primarily in the voluntary carbon market. And there are several nonprofit registries that basically register a carbon offset project and then verify that those offsets are legitimate. And there's a lot of reporting and verification and, you know, for for like a a a soil carbon project. There's, you know, measurement of carbon content in soil to verify that all these credits are what, you know, they say you're getting what you what you think you're buying. The problem is that, you know, these nature based offsets have been under fire in recent months for not not them not being accurate And I think that's what's really pushed the market towards more kind of engineered solutions that have a high degree of empirical evidence that what you're paying for is exactly what you're getting.

Okay. And so let's I'll I'll stop you midway through your your your bit there to talk about the quadrants. So on the engineers so let let's do those two. An engineered and nature nature based. Can you give some more examples of what types of things those are? And then we'll talk a little bit more.

Sure. So nature based solution could be like, you know, maybe you see some companies that say, hey, we offset all of our emissions by planting trees. And so they're paying someone somewhere to go plant trees in the hope that that will become a carbon sink. And depending on how the project is set up, sometimes those carbon savings are realized, like, the life over the life of the carbon project, actually when those that tree is planted.

And so to some degree, that's kind of why there's pushback against nature based offsets because that carbon doesn't realize, obviously, on the day the seed is planted, it realizes over the life of that tree growing. And there's a lot of things that can to a tree? Is it gonna get cut down? Is it gonna burn down?

And so I think that that's some of the criticisms of some, like, a forestry project. And then on the flip side, you know, you have these engineered solutions, and there's kind of the classic, you know, pulling gas out of the air and and storing it underground and having monitoring facilities to make sure that there's no leakage and that it's permanent, storage of carbon. But there's also engineered solutions like energy storage projects and energy storage or grid scale batteries, actually falls into this unique quadrant that we don't really see a lot of, which is that it is an avoidance offset, but it's also an engineered solution.

And we don't see a lot of engineered avoidance offsets. And I think that's what makes what we're working on unique. And, basically, the avoided emissions that an energy storage project accomplishes is avoided combustion of fossil fuels for electricity generation.

So effectively instead of relying on fossil fuels to ramp up to meet demand when renewable energy is not being produced, we can actually store renewable energy and then deliver it to the grid when it's needed to displace fossil fuels. And so it's avoided carbon emissions.

And this is awesome because we've for those of us who've been doing stuff in the battery space for a few years, we've all sort of known, you know, you can you can you can sort of figure it out that batteries displacing fossil fuels on peak, at peak times and removing, you know, gas units or coal units, and then preventing curtailment of wind and solar. This is all good stuff. Right? We know it's all good stuff, but then accounting for it, I don't feel like anyone's really made that leap yet. And I guess that's where you guys come in.

Yeah. Exactly. I mean, this is something that I kinda wondered about. So my my background is I worked at a energy storage developer owner operator, and I I was in charge of operations, so I wrote all the software that does the dispatch.

And occasionally, I would be supporting, like, an RFP where the question would be, like, what's the environmental impact of this asset? And I think everyone, like you said, sort of, intuitively, you think, okay. You soak up the extra renewables. You displace the fossil fuels.

That's kind of the classic.

Energy arbitrage use case of a battery. And I think a lot of people just think, okay, so it must be have an environmental benefit, but no one I mean, it's very hard to quantify five. And I started to think, okay, how do we quantify what the actual environmental benefit is? And, I We ended up my co founder and I ended up partnering with a company called Resherty that produces a data set called a locational marginal emissions factor.

And effectively, you know, for your listeners who are familiar with kind of how electricity pricing works, it's very similar to a locational marginal price, except for instead of representing the marginal price, of the next unit providing, you know, supplying demand, it's it's the emissions of that unit, the emissions in basically carbon per megawatt hour. And so what we can effectively calculate is the carbon content of the power when the battery is charging, and then we can calculate the carbon content of the power when the battery is discharging. Effectively what it's displacing and that delta, you can think of as kind of a carbon arbitrage.

And so that's how we can actually measure how how The arbitrage a arbitrage, if you will.

That's great. I love it. Yeah. So that's how we that's how we're able to quantify the impact And it's it's certainly an impact that batteries are having right now that are not they're not being compensated for. So I think it's really important that we recognize batteries and just grid scale storage in general for that benefit to the grid.

So let's talk about Tiara for a second. What's the background there? Well, we didn't really talk You said you worked for a big developer. Let's let's let's jump into that.

What we're doing before this, how did you get the idea? How long has the company been going? Who's involved? And what's the big vision?

Sure. Yeah. So I I started off my career as a power trader at at Citi, and I was trading US power markets. And I stayed there for four years.

That's actually where I met my co founder. We were on adjacent power trading desks, and then he went to the origination side and did a bunch of, deals with wind and solar projects. And after four years at the bank, I decided I was pretty interested in what I thought was gonna be a big change in power markets with energy storage coming to the market and really being built out at scale. So I joined an energy storage, developer owner and operator called Key Capture Energy.

The US based company actually based out in New York. I live in Houston, so I was working out of Houston office. And I worked there for for Yeah. A little over three years.

And the I mean, how tier climate was born was really out of problems that I was seeing in the industry working working with storage. And you know, I've I've seen some of the moto headlines that are kind of reflecting the same thing in the UK, which is that, you know, the revenues can sometimes be a little bit dire. And there's sort of this cannibalization of ancillary service markets that's kind of impending. Not all markets really pencil.

Like, there's a lot of markets where, like, clearly need a lot of energy storage, but sometimes it's difficult to make the financial case to actually go build it. And then on top of that, there's this kind of like, unquantifiable environmental benefit that makes it a little bit difficult to get offtake from, you know, a corporate buyer that maybe does, like, it's easy for corporate buyer to, like, see the value of, like, a wind farm, like, doing a deal with a wind farm or solar farm because they know, oh, you produce renewable power. Great. It's kind of a classic, just generation asset, whereas, like, a energy storage is a net load on the system.

So there's a lot of questions about how you value it, what is the environmental benefit, how do we get offtake to be able to, like, you know, make cash flows more stabilized and build more of these assets. So all of that led me to this to tier climate where I I I we've been working on it since January twenty twenty three, and I went full time on it in April of twenty twenty three with my co founder.

And, yeah, we've had a lot of progress since then. You know, we've I think we'd like to think that we've become sort of thought leaders in the space. We wrote a white paper, you know, studying the Ercot power grid and all the batteries in operations in twenty twenty two.

And, we're now leading the energy storage Solutions consortium, which is a group of books in the industry ranging from, developers, owner operators, corporates who are looking to do deals, service providers, to stand up a methodology with Vera or Energy Storage.

And our our goal as a company in the, really, the grand vision is to create a market where, you know, kind of akin to the rec market for wind and solar where batteries can monetize their environmental impact, and corporates can start doing deals with energy storage without having to take on, you know, like, a full toll or, like, kind of a massive operational liability and, and support energy storage through software and contracts kind of through the life of the next, I would say, probably hundred years of the power grid where we're gonna move from the fossil fuel age to the age of renewables and batteries.

Love it. Absolutely. Love it. What we've got to do here is turn something very intangible and something tangible, and that's gonna involve some math I wanna talk about how you guys do the maths and what you're thinking about that. But, yeah, we're it's great because for ten years, there's been this feel good factor of. We know we're doing something right here, but it's, yeah, to have someone do the maths on it and prove prove out the value beyond just revenues. I think will be really interesting.

So can we talk about that for a second? Your role in Tiara Climate. I can imagine it's it's a tricky role if you're gonna be doing the accounting on this stuff because you will hit skepticism left, right, and center, I imagine, and it you have to be incredibly rigorous, transparent, and Yeah. A tricky role in the middle of a market.

So how are you thinking about building a company that that will do that? And then can we jump into detail about how you're thinking about accounting for this stuff? There's lots of inputs and outputs and inefficiencies and and whatever. And what we really need is for this to work for all of us in the market, it's gotta be really robust.

So so how are you thinking about those things?

Yeah. Well, I guess The benefit of going through a carbon registry like Ferra is that it's not just to your climate that's sitting there and saying, Hey, we wanna stand up this product. This is how we're gonna measure it. There's actually, like, an independent body that they're called VBs that come come and verify the VBs.

What's that sound for?

Veri Ofops.

Verification.

Hold on. Sorry.

I always forget this acronym.

V. V. V. V. V. V.

V. Validation and verification body.

Okay.

Validation of education body.

They sound incredibly scary. Yep.

BBB.

And so essentially what they do is that once you have a methodology stood up with Vera, and you have a carbon project that's registered with Vera, you have to continually Who's Vera, Emma?

Sorry. For those who don't Yeah.

Sure. Sure. So Vera is a nonprofit carbon registry. And so they basically evaluate They're called method carbon methodologies, which is basically like someone comes and says, hey, this there's a, some technology or some project that we know can can cause carbon reductions.

And we wanna get that project recognized for those carbon reductions. And we wanna generate a credit that is, like, ver a vera backed credit. And there's There's other registries that do this as well. Vera is just one one of the world's largest.

And and so yeah. So so Vera vera approves the methodology and says, okay, this is, like, a legitimate way to generate carbon offsets. You can register projects under this umbrella methodology. That's not enough to just to start just generating credits for the life of the project. And val crediting period is usually ten years. So what happens is you register a project and then it has to be validated and verified by the VBB.

And so for every crediting period, I think the they're typically a year, like the a ten year crediting period to register an asset, but then they get the credits get validated every year.

You actually have to have this view to be coming and and look at all your data. And in some cases, if it's like a nature based project, go actually take soil measure measurements so they fly people out to the project and they validate that sentences are working properly, and they do a lot of statistics around expected error bars, and they have discount factors associated with those error bars. So it's It's, you know, I I would say a genuine attempt to carbon is very hard to measure accurately, like, and account for accurately, and there's a lot of people working on that problem. And carbon registries make a a really genuine attempt to get as accurate as possible account for how much carbon is being reduced.

And so in our case, the kind of nice thing about power markets is that, you know, a battery's charge and discharge can be measured, they via revenue grade meter at on the power grid. There's pretty much no ambiguity about what a battery is doing.

And it's all kind of this data science problem of wrangling all the data coming off of the battery and then inputting into a software solution that can measure the impact and essentially translate that charge and discharge activity into a quantified tons of evaded carbon. And I think the second part of your question was basically like, how do we how do we kind of baseline that? Or how do we, you know, how do we think about what we call as the counter factual in carbon markets? Is supposed to represent what would have happened absent to carbon market.

Right? And there's this concept of additionality in carbon markets, whereby a carbon credit has to represent carbon reductions above and beyond the normal course of business activity. So it's not enough to just say, well, Sure. A battery can reduce carbon, but if if if if the carbon market isn't responsible for getting that battery built, then that's not an additional additional removal.

Kind of an oxymoron, but, additionality.

Yeah. Yeah. I only did. Okay. So so there's kinda two flavors of how we think about this.

The first is that batteries don't necessarily inherently reduce carbon depending on which market they're operating in, their operating mode, their location on the grid. They do the thing that maximizes the revenue. And oftentimes that's providing ancillary services to the grid.

And so if you if you give a battery carbon signal, like, say, hey, I'm willing to pay you, you know, fifty dollars a ton for every carbon, every ton of carbon UFA. They can actually change their behavior from kind of that baseline, that that may be emissive or it may just be that they're not reaching their full abatement potential and shift their behavior to now be a more carbon abating asset.

And that delta between, like, what they would do in a revenue maximizing approach versus what they would do under a carbon market construct is how we account for, like, the additionality of these offsets in, in an energy storage construct. So that's kinda one one option. The other option is that there like I mentioned earlier, there's, markets where batteries don't make financial sense. Or in certain in certain, like, applications, like, if there's an existing solar project and someone wants to add a battery, but they're having trouble making the financial case. It's possible that the carbon market could step in and kind of fill that gap, that kind of missing money problem that gets a battery from, you know, NPD negative to NPD positive.

And in that case, the carbon market is responsible for getting that battery built. And so that way we would consider it to be, like, full additionality. And so that every ton that that battery abates, is an additional time that we can credit through a carbon market.

It's a completely different way of thinking. Right? So for, basically, since day zero of this industry, we've been trying to make the the the IRS as high as possible on a purely financial basis to get to get investment moving to get these assets built. And what really excites me about this is if you think about, you know, Microsoft or Google or these big data center providers who have committed to net zero over the long the long term. Some of them very ambitiously.

It's very easy for them to say I know what we'll do. I say very easy. These these are complex things to do, but it's it's simpler to say, I tell you what, we're gonna take PPAs from wind farms. And there may be a you know, a more attractive way of of getting to net zero for them via energy storage, but until now wasn't really possible to quantify in a tangible way. It's really, really exciting.

Can we just talk about some of the complexities of calculating this stuff for a second. Because you'd think so I get the ancillary services bit, which is for assets to be say you're sat in ancillary services contract and you're only using ten, twenty percent of your total power for most of the time. You actually got an asset that isn't you isn't fully utilized there. Full stop.

So that that in itself is an inefficiency in the system, which will probably turn up in the carbon accounting somewhere. But you'd think that if you are doing and excuse the clumsiness of this phrase, but arbitrage. Right? And I know that that really rattles some people into talk about it.

But if you are buying cheap selling high, you know, looking to to sell on peaks where there's more scarcity of generation. You'd think that those periods would be the high carbon periods anyway. Because cost and carbon should be correlated. That's not always the case.

So there's a natural way that I think separate tonsilary services that batteries, if they just follow price, they'll probably follow a pretty good proxy for carbon. Even if it's not perfect, What what have you found in I know you did a lot of analysis on this and you've written your white paper and and there's loads of work happening in this. What are your thoughts on on battery operations and where they can add most value from a carbon perspective.

Sure. So I've studied this pretty in-depth in the Texas in Ercot, which has a pretty substantial penetration of renewable energy. So I think it's a nice case study, and it it also doesn't have capacity market. So it's it's kind of a nice case study to see what, you know, a free free market, power market should incentivize a battery to do in a in a high renewable penetration kind of construct.

And what we found, actually, is that, you know, we looked at all the all the batteries operating in twenty twenty two as well, I think it was, like, twenty four batteries.

Well, only nineteen of them, or only five of them actually reduce emissions. The rest of them, cause emissions to go up. And it's it's Wow. I know.

It's a little sad. I know. It's a little stark. But the good news is a lot of them have the capability to reduce emissions.

So many of them do. In fact, Yeah. Many many of them can can reduce it in emissions at at a at a not so unreasonable price department. You know, basically, between fifty and a hundred dollars a ton, which sounds high for folks who are familiar with, voluntary carbon market and avoidance offset specifically, but I think that that there is appetite to pay in that ballpark.

It's Just to Europeans, it sounds totally reasonable. We have a car.

Oh, okay.

And that sounds that sounds about right, you know. But I get I get to, to American folks that sounds absolutely bizarre.

Yeah. Yeah. So what we found about, with respect to the correlation between energy prices and emissions factors is actually and I I'm with you. I completely expected this to be quite high. Like, I was expecting, like, a point eight point nine correlation just because naturally you expect that the more expensive units are burning fuel, and they should have a higher lme. Well, it's actually about point two.

So it's a lot lower than you would expect. So just pure leaf and that's for a variety of reasons.

It's like you've told me that Santa Claus isn't real.

Okay. This will make you feel better. As as we get more renewable penetration in the market, that that correlation will will go up significantly. Because the reason why it's so low is because it's not it's not high in the thermal stack, meaning that, basically, if if the marginal producer is somewhere like gas, coal, fuel oil, somewhere in the thermal stack, There's a lot of things that can cause, you know, there's, like, fuel prices like coal to gas switching.

Depends on global LNG, demand and, like, like, natural gas, like, geopolitics. There's a lot of things that can, like, impact the price of fuel, which impacts the marginal generators price, depending on the fuel type. And so the correlation kinda breaks down on the thermostat. But as the thermostat runs less, because we're increasingly adding renewable energy, tend to see that correlation improve because when in solar projects have a zero emissions, they're they're clean power.

Right? So if you actually take the thermostat completely out, you really just look at, like, the very high end, like, we're talking emissions factor is, like, you know, point six tons per megawatt hour. And then you also just look at the low end, like, the the zero emissions per megawatt hour, then the correlation improves to, like, point five point six. But it's still not I mean, it's still not one.

So the problem there is. Yeah. Yeah. The problem there is is, like, if you just operate to do energy arbitrage purely to real time energy prices.

You're not guaranteed guaranteed to maximize the carbon abatement potential of your asset. You actually have to forecast emissions factors and put that in your optimization engine.

And if there's a value of carbon, then that has a value revenue it's a revenue stream to the operator.

Right? So they can just depending on the relative value of energy price versus carbon price, the asset should, you know, participate in markets one way or another. And it's like the energy price goes bananas, you know, in this kind of hitting price cap, then the the carbon value is gonna be very diminimous. And so that the battery would just purely respond basically to the energy signal. But on, like, a, an average day where powers may be, like, twenty or thirty dollars, the the battery will respond to that carbon market and and effectively what we see is them cycle more and cycle in hours that have a higher probability of of displacing a fossil fuel unit and charging from renewable energy.

So now we're talking real time forecasting of carbon emissions as a as a signal as an input to an optimization engine.

What about Right.

What about congest So what about when batteries are being used to manage congestion on the network? That feels like a more complicated problem where there may be non obvious sort of second order carbon benefits or carbon, you know, carbon, you know, carbon, you know, problem getting worse as we just discussed. How how how are you guys thinking about that problem? Wow. This is such a complicated topic. There is so much to talk about here. How how are you how are you thinking about that?

So the nice thing about locational marginal emissions factors is that they account for the, impact of congestion. And that's actually what we see. A a lot of batteries that are most effective at evading carbon are in areas where There is quite a bit of congestion and renewable power being bottlenecked behind transmission constraints.

So, you know, effectively, what an l an LME represents is the locational marginal you know, emissions. So if the power cannot flow because there's transmission strength that's preventing you know, the renewable generation from meeting the load, then that marginal generator in that place is a renewable facility, and the LME is zero. So this is where we find projects that are located in, like, renewable pockets where price is frequently going to zero or negative in some cases in US markets.

Then a battery is able to, like, kinda soak up that power at a super low price and a low l m e, and then when and then store it, and then when the congestion is the transmission constraint is relieved because of, you know, demand is reduced. Probably most of the reason why we see that kind of diurnal shift then, a battery is able to just, displace fossil fuels by, by discharging across that transmission line. And that's basically because the the renewables are no longer producing at that time.

Yeah. I mean, it's even you could even go even there's like a double negative here.

And that if you're say you're in West Texas and it's, you know, there's a there's a lot of wind and it's the middle of the day, And so we've got curtailment and your your battery prevents in curtailment, and then using it up later.

You kinda have like a double benefit there. Yeah. Which is nice. Yeah.

So we think of the this is kind of raising an interesting point. So we think of, like, decarbonizing power as two discrete actions. The first section is that a renewable mega winner has to be produced. And that's typically captured, like, there's the the instrument that monetizes that action, is there, like, a renewable energy credit?

The second action is that you have to take that energy and displace a fossil fuel generator So sometimes those two actions happen together with a renewable facility because a renewable project is generating. At the same time, they're able to displace fossil fuels, So everyone's happy. But increasingly, and as we get as the grid becomes more saturated with renewables, that first action is happening, but the second isn't because it's a time base issue. So you could have renewables producing, and this is classic, like, duct curve.

Like, if when solar's producing in California in the in, like, the middle of the day, and it's like all the load in a certain area or sometimes on the grid is being served by renewables, then one incremental megawatt hour of solar power doesn't have any decarbonization effect because the sun goes down, we're still gonna have to ramp up.

It also feels to meet demand. So what we're kind of trying to think about is separating those two things so that when that happens, when when the production of the megawatt hour does not align with the displacement of a fossil fuel generator, the wreck just recognizes the the the production, and the carbon credit recognizes the value of shifting that production to a high carbon intensity period. And so that's the those are kind of the two destroy I think it's it's a different way of framing the thinking because I think the classic, you know, for the last twenty years, classic example is just when you produce a renewable megawatt hour and you're grading the grid. And that's not always the case anymore.

It's just kind of this new age that we're entering into where combination of of high renewable penetration and congestion is is causing curtailment, like you mentioned. And so the battery can soak up the power and basically enable more production. You know, by charging, it's in the it's enabling more production of those renewable micro hours.

So just to, like, to steal man the argument then. So what's wrong with just megawatt matching? And so megawatt matching well, let's talk what is that? And, yeah, what this is kind of what we've been doing for a long time now.

It kinda makes sense. You can talk about it in the bar and everyone understands it. You know, you make a megawatt. You get a you with the thing.

How does that work right now? And what's the problem with it?

Yeah. You know, I don't actually think there's necessarily a problem with it. I think it's different way of thinking about the problem. And it's a that she it's, you know, in pursuit of achieving this end goal, which is to get to a net zero grade.

So effectively, there's two camps. There's a there's a megawatt hour matching, which is sometimes called a twenty four by seven carbon free energy construct or Cfe. And then there's this emissions first approach. And the difference between the two is that in megawatt hour matching, you're you're effectively trying to take a discrete load.

So, like, if I'm a company and I'm Microsoft and I have, you know, my data center load, and I know what that load profile is, and it's probably pretty flat because it's a data center. Then I just need to make sure that I am buying renewable energy from somewhere, and every hour that I have low to exactly meet the megawatt hour, the megawatt requirement that I have my load. And there's, you know, there's some constraints around where that power has to be located, same grid. It's supposed to be as close as possible to the load because effectively what twenty four by seven megawatt hour matching ignores is is is congestion.

So if there is congestion between where you're buying your power and where your load is, now all of a sudden, it's pretty difficult to claim that that renewable energy is actually serving your load. Where I think the twenty four by seven contracts is actually really impactful is that because it is it requires such a a strict matching, it it basically requires you to over procure renewables and storage. And so that over procurement has a net positive effect on the grid. That's kind of like a social good.

The the kind of emissions first framework, which is where tier climate is slotting in with with our carbon offset is basically it says, like, figure out what your carbon footprint is through, like, robust and accurate carbon accounting, like, locational marginal emissions approach. And this is kind of mostly focusing on scope too. But figure out figure out what your impact is and then figure out the the the the most cost effective way to get that impact down to zero. And so you basically solve for the tons first, and then you do you know, net reduction projects that could be, like, an inset, it could be an offset, it could be a variety of things to get that carbon footprint down to zero.

And so don't necessarily think I mean, the communities behind each of these kind of ideas that missions first in the twenty four by seven seem to be a little bit at odds with each other, which I don't think should be the case. I think that there are a very clear ways in which they can work together. I mean, we need to, like, not have infighting amongst ourselves in, like, kind of the the the clean energy transition movement because it just I think it just erodes the momentum.

And I instead I think we should we should think of it as, like, both constructs moving us towards the same goal. And just accomplishing it in different ways. The benefit I do think I see in the emissions first approach is that I think it's more attainable. I think it's, like, you don't have to have a trading desk, like an energy trading desk in order to support, like, an emissions first approach, right, versus, like, a a twenty four by seven you know, you have to have some pretty sophisticated energy folks on staff that are managing your contracts and doing, you know, optimization of energy storage, and it just gets really complicated.

And the emissions first approach is, I also think, more affordable because you don't have to necessarily over procure as much. Because you're just trying to net out. Like, you could, for example, enter into contracts for renewable facilities or batteries and really dirty grids. And that might not be where your load is, But the net impact of, like, building a wind farm in, like, a grid that's served mostly by coal is much more is much more carbon impactful than building wind farm in a grid that's mostly served by wind.

Right? So that's that's kind of the difference. And I think that's where, we've seen a lot of momentum behind the emissions first approach.

You can also apply it to things beyond batteries. Right? I'm just thinking there's loads of loads of asset classes you could buy this to beyond just energy storage. You can use it for large loads, for Bitcoin miners, even some transmission equipment.

There's all sorts you could do.

I just, I I love my job on this podcast because get to have these kind of conversations all the time. This is absolutely fascinating. Emma, we've got two more questions to ask you. First one is what do you wanna shout about? What do you want everybody to hear about? What are you working on and what do you wanna plug?

Sure. So right now, we're working on a tool that will help developers and owner operators of batteries understand what their carbon impact is of either an existing asset or an asset that they're that's in development that they hope to build, that doesn't exist yet. And that will really help developers understand Which which of the products in their portfolio are the best candidate for a deal like this that have the most capability of abating carbon.

And also what price they need? Like, what what carbon price do you need? Because it's not the same at every asset necessarily. Right?

Like, what a battery needs to pencil in one market based on its operating modem and the LME at its node is not the same, you know, as as another project that's, you know, operating in a completely different way. So this tool is designed to help really, I mean, illuminate this kind of question that I feel like has been sort of shrouded in mystery for a long time. What's the environmental impact? And and and what's the value associated with carbon abatement at that asset.

And then for developers or, for for corporate off takers, it it can serve the same function. They could say, okay. If I went into a contract at about it at this node or, you know, I'm approached to do to do a deal at this you know, site, how can I understand what the value is of that deal? And and how can I understand how much how much carbon I expect to to to be able to buy off of this project on a year, you know, yearly basis, how much variance is there around that?

So that's what we're working on right now. And we're rolling that out in the next couple weeks to some beta testers. And, yeah, we're really excited to get feedback on that and continue to build that out, you know, and we kind of our grand vision is to eventually have forecasting, like long run forecasting over, you know, ten, twenty years to be able to understand what this looks like over the life of the project under different scenarios, different weather scenarios, different assumptions around wind and solar, penetration, gas price, stuff like that. So that's that's kind of the the first thing.

And then the second thing I'll say is that don't think it's enough to just stand up a carbon offset because there need like, a carbon offset can exist and, like, you can buy it and apply it against your scope three. And I think that's probably an initial, like, phase of this product, what is gonna happen. But eventually, we need to be able to account for carbon offsets in scope two. From batteries because when we do our scope to accounting right now, the only way the only product you can, like, market based product you can use is a rec.

And we know that batteries don't generate recs. So the greenhouse gas, protocols, scope to guidance, or the whole protocols is under, review right now for a major overhaul. And there's gonna be changes made to the scope to guidance. And this these are the protocols that most companies use to report their scope to emissions.

So I think it's imperative that we pay attention to what's going on so that we can include energy storage and how clean energy is recognized and attributed and reported in, you know, SEC filings ESG reporting all those things so that it's kind of embedded in the standard. Like, we don't we don't want storage to get left behind. These protocols are revised, like, every ten years. It is like, go time to make sure that storage is included in the discussion right now.

And and finally, everybody's favorite question. So what's your contrarian view?

Sure. So my contrarian view and to some people, this is not contrarian at all, but to some people it is. So I guess maybe That's what makes it, you know, controversial.

But, yeah, it's that batteries are not inherently carbon reducing assets. And, like, when you talk to some developers, I think and I think that some people say some people think if we if we stand up and we say this out loud, it's just gonna fuel fuel the narrative that we we should just keep relying on oil and gas because if if if batteries increase emissions, then why are we building them? You know, that's, like, the the fear that if we if we state the facts around what batteries are doing, that there's gonna be backlash, and it's gonna, like, stall momentum for the industry. And That's absolutely what we we do not want that to happen. Like, we want to build more batteries. We need more batteries. It is very clear to anyone who can logic out what varies are used for, that they have an immense carbon abatement potential.

But I think it's worth recognizing that it's not enough to just procure these assets. That if we want them to do the activity that we hope for, which is carbon abatement, we actually have to tell them to do it. Like, you have to guide the operations, and you know, what solves this problem completely is a carbon tax because then the value of carbon is embedded into power markets inherently. Right?

They're in it's embedded into the bids and offers of fossil fuel generators, power prices rise up. Like, sched now, you know, the the system that dispatches the grid basically just accounts for that value. We don't have a carbon tax in the US. It's very hard to see a world in which we get one in the next ten years.

And so this product, this carbon offset product, or really just a carbon signal in general, I mean, the twenty four by seven is kind of has a carbon signal embedded in it.

Can function to influence a battery, to take the activity, to do more of the activity that we're actually aiming for when we build batteries.

And, of course, batteries have a ton of other benefits. I don't mean, you know, grid stability, ancillary services. Like, those are extremely important and batteries are great at providing them. But that's we're not we're not building, you know, four hundred gigawatts of batteries in the US to provide ancillary services.

Right? We're we're building them to firm load or to to to firm up renewables to serve load. So that's, I guess, my contrarian view is, you know, I'm sort of facing the back. It's certainly not what I hope to find when I when I started studying this.

I was hoping to find that batteries were just these great carbon evading assets, and we just need to pay them. And it's not, unfortunately, not the case. I mean, some are, but but most aren't. And You know, I think it's time to for the industry to to just recognize that, you know, we have to we have to do something about that.

And perhaps not to take this question super long, but perhaps it's one of those things that, like, naturally would get sorted out in twenty years. Like, like you said, like, the correlation between LMEs and energy prices gonna get higher as we add, renewable energy to the grid. And so some people are like, well, maybe now they cause emissions to go up, but, you know, in ten years, it shouldn't be a problem. My response to that is, like, we don't have ten years.

Like, we need to solve this problem right now. Like, we need to solve this problem five years ago.

And and so Also, we've just gotta measurement I mean, any pushback on measurement is always shady.

Right? To some extent, it's always there's always something in there. And so, yeah, let's let's measure it and let's improve it.

I think, actually, that's a hell of a mic drop to finish what was an incredible conversation. Emma, I wanna say a massive thank you for joining us on the podcast. It's been great. And looking forward to seeing you soon.

Thank you so much for having me queue.