Lizzie O'Leary (3:00)

So this was a big enough deal that you guys moved fast.

Robinson Meyer (3:04)

Yeah. In our little world, which has big implications, yes, it was a big enough deal that I moved pretty fast. Yeah.

Lizzie O'Leary (3:13)

If this all sounds a little academic, I need you to understand that Microsoft, the giant tech company, is perhaps the biggest player in the carbon removal market. That's the business of getting carbon out of the atmosphere and storing it. It's a key part of climate change mitigation.

Robinson Meyer (3:31)

Microsoft has purchased 75 million tons of carbon removal.

Lizzie O'Leary (3:36)

Yeah, 75 million tons.

Robinson Meyer (3:41)

The next biggest buyer of carbon removal globally is a coalition of companies that includes McKinsey and Google and for a time, Meta and the payments processing firm Stripe called Frontier. And Frontier a few years ago decided they were going to support carbon removal as a field. They've purchased 1.8 million tons, so they bought 1.8 million tons. And they are the second largest buyer. Microsoft has bought 75 million tons and they are the largest buyer. Microsoft has bought, you know, 40 times, 50 times more of this stuff than anyone else.

Lizzie O'Leary (4:13)

So what happens now? Today on the show, Microsoft is backing away from carbon removal. That is 80% of the industry's demand is big tech abandoning its climate change goals. I'm Lizzie o' Leary and you're listening to what Next? Tbd, a show about technology, power and how the future will be determined. Stick around. Starting your own business is never easy. Starting your own podcast, that seems easy, but actually there are a ton of landmines to step on along the way. Finding producers, selling ads and connecting to WI fi. Oh, does that sound straightforward? It's not. I'm talking about sitting in coffee houses for hours after buying one scone. I'm talking about sitting in hotel lobbies and pretending your backpack is luggage. It's torture. I spent so much time making my home office look professional, but my connection didn't get the memo. The last thing you want during a major interview is for your guest's voice to turn into a stutter. When your bandwidth can't keep up with your ambition, your home office starts feeling like an amateur operation pretty fast. And for a podcast, the Internet is key, because the Internet is how we talk to almost everyone. And no matter the guest, a laggy connection can ruin an exclusive interview. Great connectivity isn't a bonus. It's the whole game. And AT&T business is here to help. They've got the tools, team and expertise you need for a stable network you can rely on. And when you can rely on the network, you can get back to thinking about the more important stuff, like nabbing that great guest and getting back to work at AND T Business Built to Work get at AND t business@business.att.com. 48 million people in the United States are adolescents between the ages of 14 and 24. They're working, parenting, leading, sometimes all at once. I'm balancing work and being a mom at the same time, and I'm still

Robinson Meyer (6:29)

on track to graduate with my bachelor's next year.

Lizzie O'Leary (6:32)

So what do today's young people need to truly thrive? Tune in to Good Things from Lemonada Media to hear the six part Thrive series.

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Lizzie O'Leary (7:44)

to understand how important the Microsoft story is, we have to do a Little Carbon Removal 101 not too long ago, carbon removal seemed like science fiction. The idea is that you take the carbon that we have burned as fossil fuels out of the air and stick

Robinson Meyer (8:02)

it back underground, and that actually addresses climate change kind of at the scale of the problem. It says if the problem of climate change and the problem of ocean acidification is that there is carbon dioxide and carbon in the atmosphere that should not be there, then we need to take it out of the atmosphere and stick it underground for a very long period of time.

Lizzie O'Leary (8:23)

Time, like more than a thousand years on what's called a geological timescale. For a long time, climate activists didn't want to do this because it felt like giving up on preventing global warming but two things happened. Number one, the tech to capture and store carbon got better. And number two, a key United nations panel said the world would overshoot its climate goals and needed to remove carbon in order to get things back on track.

Robinson Meyer (8:55)

I think that report was a major turning point for the field because it's when it went from being. It's when people went from talking about futuristic carbon scrubbing technology to us realizing, you know, no, if we take net zero by 2050 seriously, if we take these ambitious climate goals seriously, then carbon removal technology is something we are going to need and we are going to need it relatively soon. This isn't like a maybe our grandchildren will use it situation where it's like 2090, 2100. This is purely SC science fictional stuff. You know, maybe they'll be moving around by transport or two or something. This is like within the careers of people who are working now, within my career. If we want to avert the worst of climate change, then we will. It would be a really good idea to have carbon removal technology ready to go commercialized and operating at scale.

Lizzie O'Leary (9:46)

So how did a big tech company somehow become a huge player in this market? It seems kind of random.

Robinson Meyer (9:55)

Yeah, I mean, I think a number of tech companies and a number of big companies made corporate pledges around climate change in the year 2020 and the year 2021. And Microsoft's had among the most aggressive, and I think it's been the most aggressive about following through on the scale of that pledge up to this point.

Lizzie O'Leary (10:14)

Microsoft had said the company wanted to be carbon negative by 2030. It also said that by 2050 it wanted to remove its previous 45 years of emissions, which basically goes all the way back to Bill Gates in his garage.

Robinson Meyer (10:31)

I should say the scale of Microsoft's scale up has been really striking to watch. I mean, in 2021, I don't think they'd bought any carbon removal yet and now they've bought 75 million tons. And so, you know, I was talking to CEOs of carbon removal companies or I was talking to a guy who analyzes the market and works with these companies. And there are a lot of companies out there whose business model was basically, we are going to come up with this technology and then Microsoft will buy it.

Lizzie O'Leary (11:00)

Robinson's theory is that Microsoft's climate pledges also helped attract top talent in what was then a cutthroat labor market.

Robinson Meyer (11:09)

Climate commitments were part of almost a package of perks that they sold to employees, especially in 2020. 2021, the late 2000 teens, the labor market for very skilled programmers, developers, system, you know, administrators, all of those market for technologists was very intense and companies were doing anything they could to lure people to work at their company rather than a competitor. And I think having an aggressive climate policy was one way that companies were able to kind of show that their company was different, that it was worth it to work at their company, that they were interested in something more than their bottom line.

Lizzie O'Leary (11:49)

So the big question then is why is Microsoft pausing its support for this? They say they are not ending it, but pausing it. What do we know?

Robinson Meyer (12:00)

Yeah, so I should say Microsoft says they've not reduced the ambition of any of their commitments. And so they say they are still committed to becoming carbon negative by 2030, and they're still committed to removing their historic carbon emissions by 2050. What they have said is that they can adjust the wording they use is pacing and timing of some of their programs. And so I guess what I'd say is that they have denied they have argued against the idea that they are terminating this program, but they have not argued maybe against the idea that they're pausing. They haven't said why they've paused. I think there's a few reasons that we could propose. The first is that let's just look at the scale of what they've bought. If you've bought 75 million of something and the next biggest customer has bought 1.8 million, you might step back and go, let's actually see how many of these things actually work. Because the way that Microsoft has basically set up these contracts is that when we say they bought 75 million, they've signed contracts to buy 75 million tons of carbon removal. What they're actually doing is they're going to companies and saying, we will pay you upon delivery. And so if you're a startup that needs to build a kind of industrial facility or some kind of agricultural style facility to remove carbon, then you take your micro. Microsoft says, we're going to pay you. Once you've demonstrated you've removed this amount of carbon from the atmosphere, they sign a contract. You can then take that contract to a bank and get financing for that deal. And that's kind of how this works. So a lot of these tons haven't actually been removed from the atmosphere yet. The technology or the infrastructure or the facility that will be used to eventually remove them is probably being built now. And so Microsoft may just be pausing and saying, let's see which of these technological bets pays off. Let's see which of These companies are actually able to deliver these tons of. So that's one explanation. Another explanation is that Microsoft, I think like the other kind of so called hyperscalers that are trying to rapidly power up AI, is a little bit not strapped for cash at the moment, but is in the middle of what is nominally the biggest round of capital expenditure that we've ever seen in the US

Lizzie O'Leary (14:04)

economy to build all these data centers, to get the compute, to do all the.

Robinson Meyer (14:07)

Yeah, exactly. To build the chips, to buy the electricity, to buy the power plants that power the data centers, to make sure there's ample transmission space. All of this stuff takes a lot of money. And Microsoft, what we've seen is that a lot of these tech companies that were previously quite capital light, you know, they just use these cloud data centers and they just had offices and they just had employees, are now kind of becoming light industrial companies.

Lizzie O'Leary (14:34)

Ironically though, isn't AI and this hyperscaling and the, you know, building out of all these data centers, that's a very carbon producing business. And presumably if one were trying to get to net zero at some point, you would need the carbon purchase to offset that.

Robinson Meyer (14:54)

Yes. Well, when I've talked to Microsoft in previous moments, I've talked to Microsoft's chief sustainability officer and one of the things she said is that Microsoft has an internal carbon price and it has continued to honor that internal carbon price. And what it does with the money from that internal carbon price is it goes, goes and invests it in companies that it thinks are developing the kinds of technologies that it will need to eventually achieve its carbon targets. And so some of that's carbon removal companies, but sometimes it's things like jet fuel, like sustainable or low carbon or zero carbon jet fuel. And so at least as of last year, what the AI boom meant for companies like Microsoft that had internal carbon prices is that their budgets to like go invest in interesting technologies was bigger than it had been. I think that is not the case for every tech company. When heatmap polled kind of what we called climate insiders last year, so these are people who work at clean energy companies, do climate policy, do climate policy either for the government, for state governments, for companies, and we ask them which of the hyperscalers are best on climate change, it was like Microsoft and Google in the top slot and then Meta and Amazon actually quite down below. And so different companies kind of have different reputations on this, let's say. But you are absolutely right that ultimately all of this AI is going to use more electricity, at least for now, a Lot of that electricity is coming from natural gas, at least on a kind of spot market basis. And that is going to ultimately increase the amount of carbon in the atmosphere and that the amount of carbon that Microsoft, Microsoft will commit to remove. I will say at the same time, Microsoft and other and Google have tried to procure 24.7clean electricity or 24,7zero carbon electricity. They've done programs to do that as well. But ultimately, I think the scale of the build out here is such that a lot of these companies are turning to fossil fuels.

Lizzie O'Leary (16:56)

So if you just think about this as like a very simple economic supply demand situation, what happens to the removal market? Now if this massive buyer is like, yeah, we're hitting pause.

Robinson Meyer (17:08)

Look, Microsoft has bought, depending on which data source you use, somewhere between 70 to 90% of all carbon removal ever purchased. It is not just the biggest buyer in the market, is essentially the buyer in the market. And this created, obviously this was great if you were selling carbon removal, but it was a challenge, I think, for Microsoft because if you think about this, no one else is doing price discovery. Right.

Lizzie O'Leary (17:33)

Like, how do you make a market if you're the only player?

Robinson Meyer (17:36)

Exactly. I mean, look, everyone I've talked to said that it's going to be a time of contraction and difficulty in the

Lizzie O'Leary (17:44)

carbon removal market, followed by some eventual other thing. Or is this a death?

Robinson Meyer (17:50)

Now, I think that there is a big question here coming up. And so the reason you and I should care about this is that ultimately it takes about as long to commercialize a technology as it takes to raise a child. If you think about solar energy, for instance, solar panels, they're now super cheap. They're often the cheapest way to add electricity to the energy system. But they were invented basically in the 1950s, and then they began to be commercialized by the US in the 1970s. And it was only once we began to achieve mega scale when Germany started buying them from Chinese manufacturers in the 2000s, that they really began to plunge in price. We want carbon removal to experience a similar plunge in price. And that will take, frankly a lot of efforts to spend money on it in the near term. And we won't be able to achieve net zero as a country or as the world until we have cheap, abundant commercialized carbon removal efforts. So the decision about whether we achieve can achieve net zero in 2050 or can achieve net zero in 2080 is kind of being made now because we need people to buy carbon removal now if we want to have those technologies available in 2050. What's interesting is that Congress has been quite supportive on a bipartisan basis of supporting carbon removal efforts, but the Trump administration has not.

Lizzie O'Leary (19:15)

When we come back, doesn't all of this mean that American companies will lose against their global competitors?

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Lizzie O'Leary (20:03)

Have you looked at your utility bill recently and thought, how is it this high? You're not the only one.

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Rising energy costs can feel inevitable, but voters have more power than they think. Listen to good things from Lemonada Media to hear how communities are fighting back for energy affordability. Well, this is where I wanted to go on this, this like stop start, stop start policy environment. The first time I started talking about carbon policy was when I was covering Congress in 2006, I think. But also if we were to just look even a few years back at the inflation reduction act, there's a ton of stuff in there that jump started businesses, American businesses in different states, red states, blue states. And I guess I wonder like if you're living, if you're just like a regular old. I'm being as bottom line capitalist as possible. If you are trying to make business in this policy environment, how do you even do that if things are changing every two years?

Robinson Meyer (21:25)

It's a great question and I think it's a question that leaders in these industries are confronting every day. I think they have some strategies. They expect that the future will be a better policy environment than it is now. They look and say, well, Congress has authorized these programs on a bipartisan basis and the Trump administration has refused to spend them. And we think ultimately Congress is going to win in these fights because the Constitution is on its side. And so eventually, you know, the Department of Energy is supposed to be buying carbon removal itself eventually. The Department of Energy is supposed to be supporting kind of next generation carbon removal technologies. The bipartisan infrastructure law of 2021 was meant to establish these big direct air capture hubs which would pull carbon directly from the atmosphere. That money was funded on a bipartisan basis in that law. And then the Trump administration came in and froze that money when it took office. And actually just last month, it unfroze that money. And so those three facilities are going to move forward. So you could say, okay, well, there's still kind of policy momentum on the side of the industry here. I do ultimately think, though, that we will need to see more durable policy if this becomes something that businesses really invest in and really begin to expand. And when you look at countries that have been able to commercialize these frontier industries, like, say, China's now dominance in electric vehicles or China's dominance of solar panels, it did begin in some cases with companies and with investors in those countries or out of those countries making bets that policy would eventually be on their side. But it did also eventually take durable policy and durable industrial strategy to say, actually, we believe this is a frontier technology. We believe this is going to be useful in the future, and the country's going to get behind it and try to commercialize it and make sure it's an option if we want to use it, you know, on mass scale in the future.

Lizzie O'Leary (23:19)

That sort of brings me back to this question that I've had percolating in the back of my brain as I have been reading your work and others, which is like, if you run a giant multinational corporation, you're not just dealing with the United States government, you're dealing with lots of governments. So you are trying to make business decisions based on what policy is going to be in a bunch of different places. You cited China, obviously, and that just makes me wonder, will American companies, if they are sticking to following American policy, even if it's kind of grinding its way through the courts, will they get left behind?

Robinson Meyer (24:04)

I think that they already are getting left behind in a lot of cases. I mean, I think when you go back and look at the fights that we had 15 years ago, you can find columns from columnists who are still writing today who say, look, the reason that China is investing in solar, the reason that China is investing in wind, the reason that they're investing in EVs is because they don't have the fossil fuel resources that the US Does. They can make those bets because they're communists, and that's the kind of bets they're making. But ultimately, we think those bets aren't going to work out. Today, China is able to sell cheaper EVs and better cars than anyone else in the world makes. And everyone agrees on this, by the way. I mean, Jim Farley, CEO of Ford Says as much to countries around the world who don't want to be reliant on the global oil system or the global gasoline market.

Lizzie O'Leary (24:53)

Little problematic right now.

Robinson Meyer (24:55)

A little problematic right now. They are able to sell solar panels and wind turbines to countries around the world. They're able to sell them to us. And I think what we've already seen is that in a number of these frontier energy technologies the US is not just being left behind. I don't know, often when we talk about the US I find myself guilty of this too. There's like a. We tend to take like a present progressive stance to these things. Like is the US being left behind? No, it's done. We were left behind. It's over actually. Like we can catch up, but it will take a concerted program and billions of dollars of public and private investment. And I think there's reasons to make that investment. This is in EVs or solar panels or batteries really for instance. But like the US has already been left behind in a number of these technologies. But ultimately a lot of the kind of rote technological expertise that informs these technologies actually does come out of the oil and gas industry. If you think about it, it's all a form of carbon management. And the US does have a very globally competitive oil and gas industry, for better or for worse. And that puts us in a good position on these carbon removal technologies. But I don't think that's a permanent state and I don't think that's like a God given state. That's just because of historical contingency and what industries we happen to have here and what kinds of experts we happen to have here. And if we don't get serious about this soon, then I do think that it's very easy that the US could fall behind either to Europe or to Europe and China.

Lizzie O'Leary (26:24)

Maybe this is a silly question to ask, but I feel like every story about carbon capture, I just sit here and think about my kid and I sit here and think about the climate implications for the world he grows up in. Can you draw a line between this decision and the effect on the carbon removal market and what happens to the climate as he's growing up?

Robinson Meyer (26:56)

I think what I'd say is that 75 million tons for Microsoft is a lot of tons, but the overall balance of carbon and the atmosphere is still ultimately determined by the global energy system. I think where we really should really lay the blame though is ultimately we can't, as Americans, rely on American tech companies to be frankly, as generous as they've been. And as aggressive as they've been in scaling up these new technologies, there is some degree of private capital allocation that's always going to drive technologies forward. But private capital allocation alone did not create the Internet. You know, private capital allocation alone did not create jet engines. It alone did not create the technologies that go into the iPhone or cellular modems. And I don't think it's going to be the same for carbon removal for next generation batteries, for next generation EVs. All of that stuff is going to require government support. And ultimately, I do think that who ultimately bears responsibility here is our elected leaders, because they need to make the decision and they need to come to terms with the fact that in the 21st century, taking responsibility for carbon emissions is a diplomatic issue. It is a soft power issue. It is something that affects your standing around the world. The US could be a leader on this technology and we could help the rest of the world manage and reduce their carbon emissions with this technology. But it will take Congress and it will really take the executive branch to get serious about it. Carbon removal has historically been something that there's bipartisan support in Congress, but we gotta step it up. And if the US Wants to stay on the frontier of this technology, then we need to see the Trump administration and future presidents and future members of Congress really commit.

Lizzie O'Leary (28:41)

Robinson Meyer, thank you so much for coming on.

Robinson Meyer (28:44)

Thanks so much for having me.

Lizzie O'Leary (28:46)

Robinson Meyer is the founding executive editor of Heat Map News. And that is it for our show today. What Next? TBD is produced by Patrick Fort. Our show is edited by Evan Campbell. Paige Osborne is the senior supervising producer for what Next and what Next tbd. And Mia Lobel is the executive producer of podcasts here at Slate. TBD is part of the larger what Next family. And we'll be back next week with more shows. I'm Lizzie o'. Leary. Thanks for listening.

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