B (3:03)

Your question about additionality and whether you know, whether there's validity behind a wreck is a really important question. And that really to understand that, you have to understand what we do. And from our end, it's acquiring the data that moves these markets and a lot of that is held by the rtos. So miso, we have data sharing agreements with miso, the Mid Continent Independent System Operator, SPP Southwest Power Pool are the main providers of data. We also get data from the ISO in Ontario. So generation information from the entities that actually operate the grid. And then there are, there is the ability for certain customers that are regulated. So for example, utilities that can provide, especially if they operate their own control area, to provide that data directly to us as long as there's a separation of duties there. And so we take that data, we run it through feasibility analysis to make sure that it is that the, that the numbers look like they could actually be produced. And one of the things we're looking at is we just hired some folks that recently left the EPA that are data specialists to start looking at how we can integrate weather data, other, other information into our feasibility analysis to update it and modernize that process. And so we don't just trust any piece of information that we get. We still put it through a feasibility review. Our system administrators, if there's issues, will manually look at it. And then we can issue the recs. If you're looking at an electricity attribute and on the thermal side, we're talking about RTCs.

A (4:41)

So are you actually issuing the REC or you're confirming for third parties that the wreck is everything it's, it holds itself out to be?

B (4:53)

So we actually issue the rec. So they are a digital randomly serialized attribute. So they are. There's no physical certificates, but they exist within our database and they can be then bought and sold. So once they're issued, they're deposited into the generator's account. The generator can then transfer them to a counterparty. It's still a very siloed market, which is something we're trying to change in that there isn't really a robust spot, automated spot market. So a lot of these are, a lot of the transactions are done through brokers. There's no Problem, we don't have any problems with brokers but that really inhibits price discovery. They're all over the counter bilateral transactions. So you know, there's a lot of, we get this a lot like why, why is it so hard to understand wreck prices or why isn't there more liquidity? And it's really a function of the way the markets have set up and set up and we didn't set them up that way but we came in as an important piece to track and provide a repository of truth. So when, when a regulator wants to evaluate whether their regulated entity did in fact meet their requirements, they can come into our system and review the data. Or if a voluntary customer is audited by someone like the FTC or wants to provide information to like the Greenhouse Gas Protocol for example, they can open up their accounts and show that they did in fact do what they said they did, whether it's to their customers by saying we are, we produce, you know, X widgets with 100% renewable energy or we use 100% renewable natural gas or renewable hydrogen in our, in our facilities for heating purposes.

A (6:38)

As more wrecks are created, is there any move to create a more transparent market for tritium to lower the transaction costs and create long term contracts and price discovery that's easier and quicker?

B (6:54)

Yeah, so there have been movements to do that. There's, there's companies we've worked with. I probably get contacted at least once a month now with a new company looking to do that. There's been more robust transactions in Europe on electronic spot markets but it just hasn't taken off for whatever reason. You know, the, well the, getting the, the trading community to put things onto an electronic platform is a huge move. And so I think, you know, there needs to be buy in from all sides. So you know, one thing that we hear a lot is well, we want more price transparency but yet we don't want our customers or the counterparties to know about that. Well, and that's, that's part of the deal. Right? If you're going to move to an electronic trading mechanism where you have price transparency and liquidity, it just changes the amount of information available and you know, it will have impacts.

A (7:50)

Well, let's talk about where you think the market's going for Rex and, and trading too if you want to. But obviously there's been a big change in mindset out of Washington D.C. in the last eight, 10 months. How is that impacting the renewable energy credit industry? And what are some of the developments you think are going to be impacted by D.C. policy going forward, let's say for the next three, four years.

B (8:22)

Yeah. So I think to start off with one of the things that is important to recognize is, is the substantial growth that we've seen in these markets. I mean, since I've been at mirrors and all this is public, so I, I joined. It'll be in a month and a half, 10 years, we were barely a million dollars in revenue and we were issuing less than 100, sorry, 100 million certificates a year. Quite a bit less than that it was in the 70 million. And now we're over 200 million in issuance and I believe we're about $10 million. We're expecting to be about $10 million a year in revenue and our prices haven't really gone up. And so we're seeing, and it's expected that the rec market, North America, which is about $5.5 billion in value 2024, is projected to be about 12 billion by 2032. So you're looking at over a 10% growth rate, which is, which is substantial. And we're seeing that. I mean, I think our annual growth rate has been somewhere about 18%, which I always joke with my board, is not sustainable. But we keep seeing it. We don't plan for it, but we see it. And so I think what that tells me is that we tend to get a lost in the noise from D.C. and not being from D.C. i think one of the blessings of being situated in the Midwest is we're exposed to it, but not necessarily on a daily basis. And really, energy, we tend to think about it as being a federal issue, but it's really a state issue. And for the most part, the bulk of energy regulation happens at states. And we're seeing a lot of states double down on commitments. So whether it's Minnesota, Colorado or California, which, you know, I could easily point out to, to, to criticize myself as well, those are the obvious ones, right? Well, yes and no. I mean, we see states like Texas that even if they're getting rid of an rps, have still seen substantial increases in the amount of renewable generation going online. And really it's less about what one state or even one country wants to do because we're seeing these extraterritorial requirements come into place, like the Carbon Border Adjustment Mechanism, lovingly called cbam. And a state or country might say, well, we don't want to give out that data. Well, guess what? That means that you've lost out on potentially a massive international market like the European Union to Sell your goods. And so we're seeing a lot of these issues and obviously there's going to be trade disputes and we've seen those kind of things coming out of D.C. over issues like this. But in the end we've seen a sustained interest both at a policy level internationally, but even more so at a consumer level. So one thing that I like to to think about is we've seen in the 10 years that I've been at, at what formerly Emirates now clean counts is that we had most policy was driven by states in the voluntary market followed and now we're actually seeing the opposite. So so where states were really looking at 100% renewable energy standards we now see people looking at clean energy standards and Minnesota is a state being one of them that you know that once the party that helped pass the bill actually in their party platform had an anti nuclear position but they allowed nuclear to count as a zero emission resource. So we're starting to see this opening up and a lot of that came from the large consumers who have been been active in promoting their, their both production and consumption of of clean energy resources.

A (11:54)

What type of credits are we talking about? You mentioned nuclear, but obviously there's, there's more than that. And I guess if you can also include the renewable thermal credits too because I think that's kind of interesting that people probably are thinking when renewable energy credit they're probably thinking solar and wind but there's obviously a lot more than that.

B (12:12)

Yeah. And one thing I mean this is even new in our company is we really use the term environmental attribute certificate or EACS to get even nerdier. And I think that's because we've grown. It's also why we changed our name from MRTS which is a hard to pronounce acronym for Midwest Renewable Energy Tracking System to clean counts is that we're not just renewables anymore and we are tracking things what we call AECs or alternative energy certificates for nuclear pumped hydro. So there's an implied carbon benefit when you're, you're using pumps to, to, to pump water when energy prices are low. And there's an assumption and oftentimes is is proven that that carbon intensity is also low at that time. And and then using that that stored water when prices are high and oftentimes water the CI or carbon intensity of the grid at that time is high. And so that is one. We are also the first and only renewable thermal certificate tracking system. And what that is is we really originally created it for biomethane but we've also issued green hydrogen certificates already. So we actually had a bunch of our team in town from all over the country and toured Centerpoint Energy, which I believe is still the largest currently operating green electrolyzer in the United States. It wouldn't necessarily qualify for 45 volts, but that's not in place yet. But they are under a tariff through Xcel Energy for electricity. And we got to see their electrolyzer. It was pretty cool to see them open up everything and show us all the, the whole project and see where they're actually injecting their hydrogen into a high flow through area of Minneapolis. It's actually less than a mile from where I'm sitting. And then we're also working on clean fuels. So one of the things we got questions about as well, why can't we track ethanol and other voluntary clean fuel usage? And a lot of, a lot of these hard to bait industries people are looking for ways to mitigate their embedded emissions and their production processes. And then one that I'm really excited about is clean ammonia. You know, hydrogen. The joke was always that hydrogen is the fuel of the future and always will be. But one of the big problems with hydrogen is, is transporting it. But transporting it as ammonia is, is a much easier way to, to, to transport hydrogen. And so clean ammonia also has multiple uses. So you can combust it, you can combust clean ammonia for a low. There, there are other emissions, but non CO2 emissions. And then you have, so you can combust it in a stationary turbine, you can use it as a replacement or bunker fuel and marine shipping and others as long as your, your engines can take it or you have to swap out engines and then it's a fertilizer. So. And because of the need for food, there is, there is existing fertilizer or ammonia terminals globally. So the ability to move clean hydrogen around or also use ammonia as a, is a clean fuel is pretty exciting and we think has a lot of, a lot of options.

A (15:24)

So talking about that we talked a little bit about earlier in the podcast about what makes a wreck legit. How about when people are talking about emissionality debate, you know, explain it and explain what your role in that.

B (15:43)

Yeah, so I mean we view our role as a service provider and that and I've been criticized by both sides as being too in favor of the other and I kind of wear that as a badge of honor because it means I'm probably doing the right thing when you're put in the middle. But we aren't taking sides on that. Our Goal is we're really about the data. So whether you support an hourly approach or an emissionality approach and maybe just step back and explain those really quickly for, for the listeners here is the. The idea of hourly matching or 24,7 CFE is to match at an hour, hour by hour basis both the production and consumption of clean energy resources. So it could be nuclear, it could be 100% renewable, however you define that as a customer. But matching at that hourly level. And we know right now most RPS policies or other, or, or, or other clean energy goals are done at an annual or sometimes, you know, in the case of some states like Minnesota, they have a four year vintage period so you can use recs that are four years old. The idea is, well, we should, if we're using electricity and it's instantly consumed as it's produced, we should also have some sort of more granular matching to that consumption. And then emissionality is more focused on investing in areas of the grid that have the largest or have the highest emissions and so introducing renewables and areas of the grid that are dirtier to have a greater impact on emissions. So the focus is not on matching hourly necessarily, although some people look at both. So it's important to recognize that it's really about where can you have the biggest investment. And so I think one of the commonly discussed examples is that if you build a bunch of new wind in an area of the grid that already has curtailed windows, you may be just displacing existing wind and do you really bring new benefits to the grid? And I think these are discussions that we, we are a part of, but not to solve that. You know, what, what is, what is better or worse, but how do we track that and what can we do with the data? So it may, it's making sure that there's standardized processes in place, whether it's energy tag on the, the, the hourly, the hourly matching side or groups like Emissions first which are pushing for, for standards and processes on the emissionality side to make sure that we can implement them and incorporate that data onto the environmental attributes certificates.

A (18:14)

So if you were to be made king tomorrow and could impose some improvements on the system, what do you, what do you think would be the, you know, your top three picks or however you think of it, what do you think should be done here to make the system better than it is today?

B (18:32)

So I think, well, first of all, it's a scary thought for me to ever be king of anything, even if it's just the EAC markets. But I think number one would be standards. One of the biggest problems we see, and we've been really pushing this within our industry, is trying to standardize our approaches. And it's been really difficult. There's really a lack of standards and energy across the board. In terms of, especially with data. I really focus on data and I think it would be great if we could get standards in place and have the adoption of something like energy tag or an emissions first policy so that different registries aren't doing different things. And some of it may be because they're trying to get greater market share. And so they may be driven by, you know, just getting their customers, getting more customers and really moving away from that and making sure that we could apply this globally. And I think that's something that we need to be more cognizant of is that whether it's a policy like CBAM or a large CNI customer or a small manufacturer, they may have vendors or customers across the world. And if they're sending their information about their product in different forms or that data was, was not standardized, you're comparing apples to oranges there and it doesn't give us a good idea. And that's a huge problem. We see that both at the state, at federal and international level of not comparing apples to apples there. I think another problem is there's too much styling of data. And some of that happens, we'll get preachy for a second because of the difference between the for profit and nonprofit model. And organizations like Clean Pounds where we're put in the middle of. We're just trying to be an aggregator of data and a centralized resource to, to validate claims that are made. And having all of these different data sources siloed is, makes it a lot harder to not only get the data as a data provider, but then provide that information quickly. And we're seeing that change. So for example, we used to have to rely on S55 data. So that's what we would have to wait for when we get MISO data is after the last day of the settlement period. So the last day of the month, we'd have to wait 55 more days before we could get data that was 99% accurate. And now we are able to rely on S14 data from MISO. And why is that important? Well, you get your data a lot faster now. And so that means that you aren't just waiting for your asset that has real monetary value and environmental value to your organization. And then data quality is a huge problem. I'd Say that, you know, one in three. So standards and data quality are pretty much tied because if you don't have standardized ways to access data, it becomes really hard and more expensive, so, and less efficient to pull the data. But there, there really just aren't great resources. And this goes from the production level and meter data standards all the way up into the rto. And so really pushing on that issue and not just, I don't want to point out, it's not the RTO's fault, it's not the meter inverter manufacturer's fault. It, it gets into, you know, also, you know, bigger systems and government resources. And we hear this all the time. I've heard one commissioner say, you know, if I ask seven different people in my, in my commission what the emissions in my state are, I get seven very different answers. Well, that's not a good thing. And you can't fix what, you can't count. And so you have to, we have to get better at standardizing these approaches.

A (22:16)

All right, so in closing, if someone wants to work with you, what do they do? They heard this and they say, hey, you know, I'd either like to buy some racks or I'd like to get certified. What, what does that mean for you?

B (22:30)

Yeah, so if, if you're interested as a buyer, we don't sell Rex, and we don't operate, you know, list, although in the RTC side, because there is, it's still a nascent, illiquid market. We do have this buy, sell list where people can, can tell us, yeah, I want to be listed on that. I have something to buy or sell. And we do know that deals get done off that, but we prefer not to have that role. It's, it's. Go to our website@cleancounts.org and, and check it out. You can register for an account or reach out to us. So my email, Ben cleancounts.org We'd be happy to, to, to, to talk and if it, if you're interested in signing up for an account, that's great, or you have ideas to share, find me at industry events, conferences, or any of our staff. But we want to hear what customers want. I think, you know, like a problem with some of the registries have been, and they're not wrong in this, is that we exist to serve only compliance markets. And we see that as you know, as well, it's fine. There is a pressing need for the voluntary market to get engaged and they are pressing for more options, more data, more opportunities. Both of the producer side to distinguish their products and then the consumer side to show that they do in fact care about these things. So we are the first system to track pollinator friendly solar rec. So we worked with some organizations that had gotten pollinator friendly certifications for their generators and then they were able to cell pollinator friendly solar racks. And so working on innovative processes like this to to help is something we care deeply about.

A (24:15)

All right, well thanks for all the good work you're doing and wish you continued success.

B (24:19)

Thank you so much.

A (24:23)

You can find us online at www.projectfinance.law or send us an email at currentsordonrosefulbright.com Please rate, review and subscribe on Apple Podcast, Podcasts, Spotify, or your preferred podcast app. Our show today was produced by Emily Rogers.

B (24:40)

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