In this episode, I chat with investor Clay Dumas of Lowercarbon Capital about the growing use of “advance market commitments” (AMCs). We discuss how this simple idea — a group of buyers commits to purchasing a set amount of a product if it can be produced — can derisk investment and jumpstart innovation in the climate economy’s toughest sectors. Clay explains what makes for a well-designed AMC and how it can accelerate the path to commercialization for everything from carbon removal to green steel.
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Text transcript:
David Roberts
Hello, hi, and greetings. This is Volts for October 3, 2025, “Can advance market commitments jumpstart the climate’s hardest sectors?” I’m your host, David Roberts. What is the right way to accelerate the scale-up of new businesses and industries that we need for decarbonization? For years, climate funders and VCs have wrestled with this question, and a great deal of money has been wasted on funding mechanisms and projects that did not produce the desired results, particularly in so-called “difficult to decarbonize” heavy industries.
Now, opinion among funders is shifting, and support is growing for “advance market commitments” (AMCs). Volts listeners may have heard this term for the first time a few years ago when the group Frontier launched an AMC for carbon removal — (Volts pod here). Or perhaps when the US government produced an AMC for new vaccines during the pandemic. You might recall that that one worked out pretty well.
So what is an AMC? Basically, it amounts to rounding up buyers for the desired product — carbon removal, green steel, carbon-free shipping, what have you — and having them sign a commitment: if you produce this product, we will buy it. Needless to say, it is much easier for a startup to get a low-interest loan from a bank if they can show the bank a large pool of guaranteed customers.
Use of AMCs has lots of buzz and is growing quickly. It is being coordinated by the Center for Green Market Activation, which had me out for a Climate Week NYC event wherein I interviewed longtime green investor Clay Dumas, a founding partner at Lowercarbon Capital. We talked about the origins of AMCs, the different varieties, the concerns involved in crafting them, and how they might be used in the future. Enjoy.
Host
I would like to welcome two people to stage that do not need an introduction: David Roberts, the writer and creator of Volts podcast, and Clay Dumas, the Managing Director from Lowercarbon Capital. Give him a hand.
David Roberts
Hi there. Thanks for coming. Hello, Clay.
Clay Dumas
Hello, David.
David Roberts
I want to talk about advance market commitments, but first I thought it would be nice to start — I mean, probably the people in this room know the answer to this question, but perhaps listeners to my podcast are not as familiar — talk about some of the lessons learned in the initial waves of climate investment. Kind of the standard story you hear is a bunch of digital tech investors got excited about climate, herded in, burned a bunch of money, wasted a bunch of money, didn’t get a lot out of it, learned a lot of lessons. What did the investor community take away from the earlier rounds of this?
Clay Dumas
Yeah, I think you’re talking about what sometimes is referred to as Cleantech 1.0 and the wave of early investments in this space, a lot of them in solar and biofuels. It didn’t work out, or at least they didn’t work out on the timelines that the limited partners and investors in a lot of those funds hoped that they would. Look, I’m one of those people that had a lot of those biases about investing in climate tech. Lowercarbon got started during the first Trump administration. We’re very much of this wave we call climate tech — Cleantech 1.0 was its own beast.
And a lot of the lessons that people took away from that first wave is that it’s going to cost a billion dollars just to get out the gates with any one of these technologies. The business models don’t pencil unless you get policies to change. And even then you’ve got to find the buyers, customers, the consumers, the businesses who are going to pay more, suffer some inconvenience, go out of their way to buy your product, and none of that adds up to a good investment. That’s how a lot of people thought about what we now call climate tech throughout the 2010s.
And it’s why investment in this space dried up the way that it did for us and for a lot of other people that have gotten back in over the last few years. The thing that shifted our thinking was the underlying technology changes that made building companies in this space cheaper, better, faster than it had ever been before. And when we started realizing the ways in which — I mean, it’s not just about renewable energy, right? You know, I’ve told that story thousands of times about how the declining costs of solar and wind and now batteries will help to electrify everything.
That was foundational for a lot of the things that we would go on to invest in. But by itself, that wasn’t enough. It was also what was happening in electrochemistry and our command of inorganic materials in parallel to the incredible breakthroughs in synthetic biology, bringing down the cost of reading, writing, editing DNA by like a million X over the course of a couple decades. And then everything getting accelerated by machine learning — now what we can all look each other in the eye and call AI. And that shifted the core economics where for just a few million dollars, you could de-risk a lot of the science and technology associated with the technologies that we invest in and start working on the really hard part of building a business, which is what we’re here to talk about today, and that’s distribution.
And how do you actually put products in the hands of customers?
David Roberts
Talk a little bit about Lowercarbon, your approach, how you are distinguished from other investment firms, like how you think about not just writing big checks, but the other stuff around them?
Clay Dumas
Yeah. Well, here’s what I’ll start off by saying: One really foundational belief that we had when we got started building Lowercarbon Capital — and I should just say Lowercarbon Capital is a firm I built with my partners Chris and Krystal Sacca, who before this were building Lowercase Capital, legendarily successful early-stage venture investors investing in consumer and enterprise technologies. A lot of household name companies like Uber and Twitter and Twilio and Instagram and a lot of the big names from that era of Web 2.0. When we got started looking in this space, the one thing we deeply believed is that if we were going to have to guilt and shame our way into people’s homes and businesses, we were never going to get there.
That there are only a couple hundred million people — I think if we’re being very generous with our fellow humans — who are going to go out of their way and do the right thing for the planet. And that just doesn’t get us anywhere. We had to offer people something that was better, faster, cheaper, was more performant, was tastier, healthier, had better supply chains. And only if you could convert the other, whatever, seven and a half billion people going on 8 billion people into hippies, did you have a chance of actually making a dent in atmospheric CO2. So that was foundational for us, is that it had to win, it had to win in people’s pocketbooks.
David Roberts
So let’s talk about advance market commitments then, because they’re a tool for that. I think people have been talking about them all day today. But just perhaps for Volts listeners, just briefly describe what an advance market commitment is and the sort of success stories from the past like vaccines. I think people remember Frontier — this is ongoing, I think. So talk a little bit about where, what these things are and where they’ve worked before.
Clay Dumas
Yeah. So at a really high level, an advance market commitment is an advance commitment by a bunch of buyers who want something that doesn’t necessarily exist yet. They can’t just pull it off the shelf, who are sending a signal to the market saying “If you can give us this thing at some agreed upon price — and that price may fluctuate over time — we’re going to buy a whole lot of it.” And people are familiar with this concept from the procurement of COVID vaccines. The US government said, “Hey, if you can deliver a vaccine that prevents people from getting sick with COVID, we’re going to buy literally billions of dollars upfront.” And that created a really strong incentive for a bunch of companies to go and develop a vaccine faster than they ever have before. This is a variation on a concept we know in energy markets too. I mean, feed-in tariffs are not that different conceptually from the idea of an advance market commitment; “If you can deliver us this thing, we’ll pay for it up to this amount.” In climate tech, we’ve been leaning into this idea for especially new and nascent markets where there is demand, but it’s still coming together and the buyers don’t necessarily know the exact specifications of what they’re looking for or how to diligence the technical specs of one versus the other.
But broadly speaking, they know they want a bunch of carbon removal. This is what Nan Ransohoff, our partner at Lowercarbon, now Ryan Orbach, and the team at Stripe, pioneered with Frontier a few years ago when the entire market for durable carbon removal was like a million dollars a year. I remember actually it was at Climate Week when I first met them in 2018, and they were talking to us about doing a million-dollar commitment because nobody else was buying it. A few years later, they rounded up a bunch of their fellow corporates who are interested in driving the space forward and announced a billion-dollar commitment to buy carbon removal from anyone who could produce it as long as they could demonstrate a path to store it away for up to 1,000 years.
And that completely transformed the market. At that point, there were a few companies that had been kind of toiling away for a couple decades, working on ways to engineer big machines that would suck up a bunch of air, separate the carbon, and stick it in the ground. Over the course of the five years from 2020 to 2025, I think the number of new carbon removal startups that got launched was something like 1,800. It was close to 2,000. Just an insane number.
David Roberts
Aren’t like 1,972 of those dead at this point?
Clay Dumas
Well, look, the nature of what we do in early-stage technology investing is to pick a bunch of unreasonably ambitious businesses, but we don’t need every single one of them to succeed. In carbon removal, actually, what we’ve seen is a ton of those start to scale up and even begin to address secondary and tertiary markets. And as a result of a lot of the advance market commitments that have been made, some of those businesses now have billions of dollars in offtakes over the next few years, which have allowed them to go secure debt, hire a bunch of team members so that they can actually deliver on these massive contracts.
And so this basic idea of getting the buyers together to stick a flag in the ground and say, “If you deliver this product, we will buy it from you,” is really accelerative for some of the industries where we need to push things along a little faster.
David Roberts
And it seems like another one of the merits is that it specifies an outcome rather than a mechanism. So it’s a way to suss out which mechanisms are going to work.
Clay Dumas
Yeah, I think this is a really important attribute of a good, well-structured AMC. We live in a world today where we have a lot of good technologies for making clean electrons, we know how to deploy solar and wind, we have batteries that are getting really cheap. And that’s going to help us solve a lot of the challenges with defossilizing the global economy. But it only gets us part of the way; the rest of the economy, the rest of the pie chart of global emissions that you need to defossilize and decarbonize — we just don’t have the solutions for a lot of that yet, or we don’t have them at scale.
We have a bunch of them in our portfolio. We have companies that are totally decarbonizing the production of plastics and fertilizers and high-value chemicals and maritime shipping and sustainable aviation fuels and basically everything that’s on the panels behind me. But they’re still in the process of scaling up. And if we are going to get there faster than the ordinary course of events, the challenge now is not solving the technology. A lot of these technologies work, and they are working so well that they’re on a path to be cost-competitive, if not completely obliterate the kind of fossil-fueled alternatives over time and at scale.
What stands between today and that future state where we’ve eliminated a bunch of global emissions is distribution. And it’s getting in front of customers, and it’s getting customers to make those purchase decisions. And any mechanism that we can use to help drive that forward is a good one in my book.
David Roberts
Sort of, at first blush, it kind of seems like this is a weapon you could point at any market or product you want to, you know what I mean? It seems like you could accelerate anything you want with this. Are there limitations? Are there kinds of markets or products that you think are not, would not be suited to this? Or is this just like a general-purpose tool?
Clay Dumas
I think markets that are a little bit more mature, where customers get already exactly the thing that they’re looking for, probably aren’t as well suited to an advance market commitment. But you make an interesting point, and it’s an important one, which is this is a very, very potent tool for driving forward innovation. And arguably we haven’t really learned the lesson of — I mean, for a lot of reasons — the lesson of COVID vaccines and Operation Warp Speed. That’s a story for another book. But just how accelerative they can be. I think the right answer to your question, Dave, is that we should be using AMCs for all manner of technologies that are important from a national economic, security standpoint.
This is how we accelerate technology innovation and adoption in a way that doesn’t pick winners. There’s a really poor and checkered history of government trying to pick the exact winners in different industries. It just doesn’t work. But when you say “We will buy clean electrons from whoever can supply them to us for the least amount of money in the shortest amount of time,” that drives a cycle of innovation. When you say, “Hey, can someone come up with ways to capture a bunch of carbon out of the atmosphere and put it back in the ground the way that Frontier did?”
We didn’t just scale up the things that people have been working on for 10 years. We pulled in literally thousands of people who had never really thought about this problem before, who had never felt like there was an incentive to go solve it, even if they had this awesome idea in the back of their heads. And they went and developed a bunch of solutions that would have blown the minds of the world-leading experts just three or four years earlier. And we’ve seen this happen over and over again where the new technologies that emerge completely violate every narrative rule of how you are supposed to decarbonize nickel.
We have companies in our portfolio that, instead of figuring out ways to mine the ground more efficiently, have figured out how to engineer plants that pull the metals like nickel straight out of the ground and into their leafy matter. That was not on our bingo card for how we were going to address that industry. And yet, to me, that’s one of the most promising mining companies in the entire world.
David Roberts
The AMC I’m most familiar with — the Frontier thing — was mostly about taking companies that are in the lab or even companies that are just like a gleam in someone’s eye, or companies that have just got a prototype or whatever, and helping them cross that chasm into commercialization. But we were talking backstage and you mentioned also that you can use these things for industries that have already reached a certain level of maturity, and you just want them bigger, you know what I mean? So it’s interesting to me that this is not a purely early-stage, not purely Valley of Death play.
Clay Dumas
Well, a lot of where we are in the climate cycle or the climate tech cycle today is not, like I said, just about solving technology problems. It’s about solving market problems, and it’s about helping early-stage companies access more capital and lower-cost capital. So let’s take the example of Nevoya, the company who many of you just heard was awarded an AMC today for electrifying short-haul shipping. This is a solution that a lot of corporate customers were in the market for and trying to figure out who is going to be able to rise to the challenge of supplying it.
It would have been really redundant if every single one of those teams had to go figure out how to decarbonize this specific piece of their supply chain. The work that the Center for Green Market Activation has done is specifically to help bring all those customers together and drive forward a purchase for Nevoya. That’s going to take them from already rapidly scaling revenue into something that grows almost 10x overnight, allows them to access a lot more capital at lower cost, to get more trucks, to hire bigger teams, to start decarbonizing more routes. And that’s the thing that takes an already great business and brings it to hyperscale within the time spans that matter for all the stuff that we care about.
David Roberts
From the perspective of the companies who are signing up for these things, is there any risk or downside? I mean, it kind of seems like it’s just all upside for the companies involved. Like if the product doesn’t show up, they don’t lose anything, if it does, they get it. Have you had any pushback or is there any risk to the companies involved? Have you had to persuade them for some reason?
Clay Dumas
I mean, there are certainly some businesses around the world who say, “Well, why don’t you guys figure it out, do your advance market commitments and come let us know when it’s worked, who won, and we’ll buy from them.” So not everybody can be a first mover, sort of by definition. But I think what you see when you come to an event like this and you see the companies that are represented, there are a lot of people that want to be part of that first cohort, who are raising their hands and who are looking for the solutions. And so my general take is that as people see this mechanism work — and it is, to your point, pretty low risk — if you deliver the thing and it meets these specifications, we’ll pay you for it.
And if you don’t, yeah, we sunk some time into designing the program at the outset and maybe we paid a little bit more than we ordinarily would have for the first two or three times that you’d moved our product from Dallas to Houston. But at the end of the day, it’s not too much skin off their backs. And I think that’s one of the really beautiful aspects of advance market commitments — it requires buy-in from everyone and an upfront commitment, but you don’t have to pay for anything you didn’t receive.
David Roberts
I’m wondering if you’ve ever had the experience or anyone has had the experience of approaching a sort of sector where the price delta is so big and the technological maturity is so far off that you just can’t find enough buyers to make a meaningful pool. You just can’t pull together an AMC. Have you had that experience?
Clay Dumas
We haven’t had that experience yet, but certainly there are lots of companies around the world that have suffered from this exact challenge. It’s not just in climate tech. This is a frequent issue that companies run into when they’re trying to scale new technologies or even proven ones, but they just can’t find the customers. They can’t find the customers fast enough. So this is just a risk in any sort of company building. Certainly with hard tech, we have businesses that we invested in at very early stages that were extremely promising and doing something in a totally novel way, and they didn’t come down the cost curve as fast as we expected.
And it required them to pivot a little bit in thinking about how they were going to develop a product or sell it or who they were going to sell it to. The reality of this work is that it’s really dynamic. You have to adapt. But at the end of the day, I think we’re seeing a lot more progress than people expected in some of these frontier technology areas. And seeing the commitments start to materialize in big ways has me feeling very optimistic about how we will continue to scale up these new technologies.
David Roberts
Yeah. And similar question, are there any downsides here? Are there any risks? What could go wrong? Is there anything that could go wrong? It seems weirdly sort of foolproof, which I guess makes me a little suspicious. What’s the, what’s the catch? You know, like, what could go wrong?
Clay Dumas
Well, there’s a lot of things that could go wrong if you design your AMC poorly. Let’s take an area of shared exasperation, like hydrogen production for transportation. You could design an AMC for green hydrogen to fly planes or drive trucks and spend a lot of money on that and get a bunch of green hydrogen delivered to you. But if that doesn’t solve the problem that you’re trying to solve — in this case climate change — because half the hydrogen leaked away and actually caused more warming than it reduced, then that would be a poorly designed AMC.
David Roberts
So could you generalize? What are the features of a well-designed AMC? I mean, is it mostly about the choice of sector, mostly about the choice of product, or are there others?
Clay Dumas
Well, I don’t want to overly generalize because it really does vary a little bit by category and specific product. But at the front end, what you need is a big enough pool of commitments or capital that the pot at the end of the rainbow is a sufficient incentive to actually get new approaches into the market. You don’t want to do an AMC that’s too small or underwhelming so that you just get a bunch of crappy solutions that can never scale. And so you bought a bunch of the thing, but you didn’t actually bring it down the cost curve.
So you need a big enough pool that people are actually motivated to go solve the problem. You also need very clear standards because you’re buying output, not process. And so you need to be very clear about the shape of the thing that you want to buy. Frontier, again, going back to this example because it was a very carefully designed AMC, they were very clear that they want not just carbon removal, they want carbon removal that they can be confident — their scientific diligence teams could be confident — would store it away for up to 1,000 years. That was a really clear decision.
They could have said 100 years, which would have yielded a totally different set of technology options for them. So you have to be really clear about the specifications, and then you have to be really active in making sure that those initial AMCs can grow or turn into long-term offtakes with customers that are bankable. And at the end of the day, the whole goal of this endeavor is to make sure that the leading technology companies in the world can find customers that, when they take it to banks and product finance shops and who are evaluating the deal, can say, “Oh, this is great, you got a buyer on the other end for this product that we can underwrite and we’re going to help you finance it.” So instead of going and getting a bunch of venture capital from those folks over at Lowercarbon Capital, at this point you can get low-cost capital from us that puts them on a path to big outcomes, whether it’s an IPO or M&A, and ultimately at the end of the day, achieving the goal that we have at Lowercarbon — but I know I share with so many people in this room — which is how do we provide energy and material abundance without turning the entire planet into an open pit mine?
To do that, you need to transform a whole host of industries, maybe every industry on earth today. And you’re not going to do that by asking people to give up the foods and products and modes of transportation that they not just enjoy, but in most places in the world, like, depend on for their very livelihood. That’s just a losing proposition. I don’t know what your experience in human nature has been if you think that asking people to shrink their lives is an easy sell. But I don’t know, man, I got a bridge to sell you. Unfortunately, we have only one way out of here.
And it’s to build our way out with new technologies and to bring those to people in every industry here and around the world.
David Roberts
The challenge, it seems to me in terms of design, like in the carbon removal example, that seems like a bit of a gimme because carbon comes in tons, right? There’s a metric already, there’s sort of like a pre-existing metric, but like, you know, net zero trucking. What is the unit? You know what I mean? What are the units you’re asking for? Is it amount of fuel, miles without emissions? You know, how do you think about that?
Clay Dumas
Yeah, I mean, so that’s a really good question. This gets back to the AMC design point. You know, in carbon, it was for every ton of carbon that we can lock away for 1,000 plus years. In shipping, a lot of it is like, “How many goods can you move, how many miles?” That’s the thing ultimately you care about. You could drive electric trucks up and down the 405 in California all day long and not move any goods. That doesn’t do anybody any good. And so it’s ultimately a question of how many things went from point A to point B without generating incremental carbon emissions.
David Roberts
A question that came up a lot as I was thinking about this is when I think about who is often the biggest customer of all the customers, it is the US government. And back in the before times a year ago, there were conscious efforts to use the government’s procurement more or less in this style. And I wonder, like, are governments — I mean, obviously, I guess the US federal government is not going to be a big partner to you now — but what about like state governments or city governments? Like, these are big entities that have a lot of demand for things. Are they being roped into this at all?
Clay Dumas
First of all, I would say, and this is not a political statement — I do usually wear my politics on my sleeve — but you would be surprised to find out that even today, under the leadership that we have, the federal government is a very active buyer of a lot of things in our portfolio. And sometimes the — I was going to say DOD, but the Department of War is the buyer more often than it used to be because they happen to have access to a lot more cash these days than some of our, the folks that used to work at the Department of Energy.
So that’s all to say, there’s actually quite a lot of interest in a lot of the products in our portfolio from the federal government still today, who recognize that while they, you know, climate may not be the preferred nomenclature, but there’s a lot of things the federal government used to buy from China or other parts of the world that are on the unfriendly list today. And they’re looking for solutions. And when they cast about, the ones they settle on are the kinds of companies that are in our portfolio. So we’ve actually seen for certain sectors, kind of a boom over the last nine months, which surprises a lot of people when you reveal that to them.
But it might have a different justification. It’s not about keeping the planet safe and habitable for 8 billion people. It’s about taking command of our supply chains and reshoring critical industries. But to the other part of your question, which is, what can state and local governments do? Well, a lot, and they’re already doing a lot. And you see a lot of these AMC structures start to get spun up at the state level, at the local level. On our team at Lowercarbon, we work a lot with both buyers and regulators at the state and policy level to identify solutions for them.
David Roberts
So they are acting as customers in AMCs already?
Clay Dumas
Absolutely. We have municipalities in California that are buying clean roads from companies in our portfolio, like Carbon Crusher, buying clean cement from Sublime, because it helps them hit their decarbonization goals without driving up all their costs. And that’s ultimately what they’re looking for.
David Roberts
And something you said just a second ago sort of made me think, like, could you imagine an AMC rather than just sort of to get more of a product, to shift the way the product is made, where it’s made, how it’s made, mining more sustainably, or move a supply chain here or there? Could you construct something to sort of shift those aspects of the business too?
Clay Dumas
You absolutely could. And if anyone in the room is listening and wants some ideas, I have a few for you, so come find me afterwards. But if you wanted to say that you wanted more sustainable lithium, say, for making lithium batteries, but you wanted only lithium that was produced here in the United States, you could do that. And if you’re listening out there and you’re a lithium buyer, you should do that sort of thing. And I think you could do it for a whole host of products that we could produce here and in friendly parts of the world, and to do it in a way that’s going to be more sustainable.
David Roberts
As these things grow in popularity, catch on, get more popular, show success, is there a risk of, like, for a single sector, there being multiple parties trying to create sort of competing AMCs or like, is there anyone coordinating? Is there a coordinating mechanism such that you can pool these things and you don’t end up with cross signals?
Clay Dumas
I regret to inform you that some of what you’re talking about has already taken place. But the solution is the kind of organization that we are on stage to recognize today. That’s exactly what they’re doing, is trying to create more standardization, greater clarity, establish the rules of the road to do this not just in one market, but in one market after another so that we can actually make durable and tangible progress toward decarbonizing these really dirty but critical industries.
David Roberts
If I’m going home to talk to normies and tell them about this, what’s the biggest success story? Striking vaccines, striking the carbon capture thing. In terms of these difficult-to-decarbonize sectors that we’re talking about, is there like a leader yet? Is there a sort of like one you want to put on the poster, the advertisement for AMCs?
Clay Dumas
I mean, I would literally point people to the five or six posters behind us. I think there’s a lot of companies that have already emerged as great winners here. We recognized Nevoya earlier today. I think there’s some really exciting announcements that are going to come on fertilizer soon, soon on clean and green cement, on steel. But let’s go back to a comment I made earlier. I think that if you look back at the history of renewable power, again, we didn’t call them advance market commitments — and it’s not exactly accurate to call feed-in tariffs an AMC.
But one of the reasons why they created so much solar power in Germany is because there was a buyer that said “If you produce it for us, we will buy it.” If we can adapt that model to a bunch of the other industries where we have solutions today that as they scale will get cheaper and be deflationary and cleaner and they won’t pollute the air and the water and they’ll give people a better experience and a cleaner supply chain. The opportunity is there to do this over and over again for decades. In industries — again, it doesn’t work for every industry. And the industries will grow out of AMCs over time.
But for a lot of the areas where we know that we will be better off 10 or 15 years from now by making some of these investments today, this is absolutely a mechanism we should be replicating over and over again.
David Roberts
Yeah, and I meant to ask, like, the intent here is to grow past them, right? The intent here is not to sort of get stuck depending on them, but basically to scale such that a market is created and then you no longer need them. Right. I mean, it’s sort of implicit, I guess?
Clay Dumas
Yeah, that’s kind of implicit in what’s happening here. At the end of the day, what you’re hoping to do is accelerate distribution and adoption of new technologies, and hopefully you don’t need them anymore because all the customers participating in the AMC continue to procure and buy the product that is cleaner and greener. But over time, that shouldn’t require this type of structure, organization, and people can move on to new problems to solve.
David Roberts
Jigar, you have a question?
Jigar Shah
I just want to pull on the thread that you just opened. To what end exactly? You get the advance market commitments. What we did in the past was a renewable portfolio standard. You could imagine saying 1% of all cement in the state of California purchased by the Department of Transportation is now going to be green. And then it goes to 2%. Right. The European Union has certainly said that “Here’s our metric for SAF.” On the European Union side. Right. Then the Biden administration certainly said that we were going to use the procurement power of the government, which I never saw that I could tell.
But I guess what I’m trying to figure out is, is that a deliberate next step that you expect from the posters behind you?
Clay Dumas
Well, if things succeed here and we can see our path toward enough supply of green cement or steel that you can actually start to craft a renewable portfolio standard around — a renewable portfolio standard-like structure around — some of these markets, that would absolutely be the goal. And ultimately the question here is how do we create enough certainty of demand in the future for this product so that we can make the investments today to scale it up and bring down the cost. At the end of the day, that’s the thing that we care most about as investors, because that gives us confidence that these businesses will be sustainable and survive way past the day when people need to chip in venture capital to keep them alive and to grow into high-margin, very large businesses. I think that’s in a lot of ways been successful for some of the markets you just talked about, Jigar.
And our hope, our expectation is that we will look back at some of these initial AMCs and see that they seeded some very important new consortiums of buyers, that they laid the groundwork for exactly the types of — whether it’s public or private sector procurements — that drive up massive adoption of these things. So that we’re not just talking about decarbonizing individual routes, but saying that across the entire supply chain globally for some of the biggest customers of clean shipping, that they are able to decarbonize and have solutions that will help them to decarbonize 10, then 20, and eventually 50, 60, 70% of their global freight.
First Audience Question
Thank you. Thanks for the great chat. Just what I’m curious about is what’s your best guess on how long each cycle of iteration takes in these AMCs creating the change that we want? Are we talking about being able to realize all the benefits within number one, how many cycles, and then how long does each cycle take before we iterate and learn from it?
Clay Dumas
I want to be careful about overly generalizing here because every sector and industry and technology type is going to have a slightly different answer. But what I will say is this: if you just look at the examples that we have, they have tended to over-deliver from a timeline standpoint. When they launched Operation Warp Speed, no one expected that we would actually have a functioning COVID vaccine as fast as we did. When Frontier kicked off their procurement for carbon removal, no one expected that almost 2,000 carbon removal companies would get started or that companies would be able to come down the cost curve as quickly as they have.
Which isn’t to say that we’re there yet. It’s going to take a while. And I think that realistically these are going to be multi-year cycles. In some sectors, like clean shipping, it might be a little bit faster than in green steel or green cement, where you have to put more steel and infrastructure in the ground before you can get up and running. But as a general proposition, I wouldn’t bet against this mechanism. It’s not going to work perfectly every time, but the early examples that we have are very encouraging about what’s possible.
David Roberts
All right, great. We’re out of time. Thank you, everybody. Thanks for coming.
Clay Dumas
Thank you.
David Roberts
Thank you for listening to Volts. It takes a village to make this podcast work. Shout out, especially, to my super producer, Kyle McDonald, who makes me and my guests sound smart every week. And it is all supported entirely by listeners like you. So, if you value conversations like this, please consider joining our community of paid subscribers at volts.wtf. Or, leaving a nice review, or telling a friend about Volts. Or all three. Thanks so much, and I’ll see you next time.
