Reducing carbon emissions is vital if we are going to slow down global warming caused by human activities. But too often, society and businesses see this effort as yet another expensive set of regulations with which they have to comply. Bernard J. David, chairman and CEO of CO2 Sciences, and founder of the Global CO2 Initiative, believes that showing companies how they can profit from the capture and reuse of carbon dioxide will get more people engaged. He discussed his ideas on the Knowledge at Wharton show on Wharton Business Radio, which airs on SiriusXM channel 111.

An edited transcript of the conversation follows.

Knowledge at Wharton: At [the World Economic Forum in] Davos this year, you launched the Global CO2 Initiative. Did you come up with the idea, and if so, what was your inspiration?

Bernard J. David: I absolutely did. I was at Caltech about three years ago … [and] I saw that we had hit 400 parts per million of CO2 in the atmosphere, realized that that was a big challenge and everyone was concerned about it. So I just said, “Wait a second: Could we actually take CO2 and make products out of it?” And it’s kind of gone from there.

Knowledge at Wharton: How do you go about taking CO2 from the atmosphere and turning it into products? Can you explain that a little bit?

David: There are actually five sources of CO2 that can be used to make into products. First, CO2 comes out of the ground and that actually is used somewhat in something called “enhanced oil recovery,” to get more oil out of oil wells. It actually comes off of industrial sources. So in your manufacturing, you have a very pure stream of CO2 and that’s a second source that can be used to make products, as well. A third source is, before you burn it, you can take coal and take the carbon out of it, so you don’t have the CO2, and you can make fuels, amongst other things.

Or you can take it off a coal-fired power plant as it’s escaping into the atmosphere, and that’s actually a good place to do it because it’s highly energetic. You can capture it and use it there. And capturing it out of the air, where it’s 400 parts per million, you can also do. The challenge with each of those five approaches is the cost.

“Could we actually take CO2 and make products out of it?”

The least expensive is taking it out of the ground, and then industrial sources, and it goes all the way up to taking it directly out of the air. Today, it costs between $600 and $1,000 a ton to take it out of the air, because it’s a needle in a haystack problem. There are only 400 parts per million.

Knowledge at Wharton: Once you take the carbon from the atmosphere and you want to turn it into products, how large is the market for carbon capture and utilization products? What’s the business opportunity there?

David: That’s a very good question, and in fact, one that I asked early on, because I was concerned. I was first concerned about the technical doability — and we can talk about that later. But then, I was also concerned about the market size. So we had McKinsey & Co. do a market assessment for us of the global markets: What can you actually use CO2 for? What kind of products can you create? What’s the size of these markets? What’s the competitive landscape? Just on and on and on. We discovered that you can actually make 25 different products out of CO2, and in 2030, the projection is this will be an $800 billion to $1.1 trillion annual market. So it’s a big deal.

Knowledge at Wharton: Wow. Coming back to the point earlier about taking carbon from the different processes that you mentioned. What’s going to be your strategy, your area of focus? You’re probably not focusing on the air first, I would imagine.

David: Right. The way we’re working, we’re actually building an entire ecosystem, because we realize that such an animal did not exist. We think an end-to-end solution is absolutely critical, which means that we’re going to endeavor to fund R&D all over the world, with people who have novel ideas to capture and transform CO2. We’re also then going to focus in on the commercialization aspect: How do we actually commercialize these things? Because ultimately, the solutions have got to get to scale so that it both creates the revenue and is climatologically significant, meaning that it matters that we can capture enough of the CO2 that’s in the atmosphere.

Knowledge at Wharton: You mentioned research projects. I saw on your website that there is a plan to fund about $100 million a year in research?
How would that process work? And where are you at today in that process?

David: Today, we’ve gotten commitments for over $50 million total, and our goal is to frankly, aggregate as much money as possible … so that we can in turn fund more R&D. And our goal is $100 million a year for 10 years, so that’s $1 billion. We’d love to have $2 billion, we’d love to have $3 billion, or even more, because the more we have, the more we can fund from an R&D standpoint. How it will work is if you have an idea, you’ll present that idea to us and it will be vetted on technical terms. Does it work? Does it violate any of the laws of thermodynamics?

And, it will be vetted by a very esteemed panel of scientists. If it passes that test, the question is, “How large is the market?” If you look at fizzy water, and let’s say that’s your application, that’s a pretty small market. So even if your application can work, if it’s a small one, it doesn’t necessarily fit that climatologically significant screen.

We’ll then give you an award of let’s just say, hypothetically, $250,000. You’ll go off and you’ll work on your invention. We’ll work with you. It goes from inception to bench-scale prototype, to pilot plant, to hopefully, large-scale commercialization. And when we’re doing that, we’ll bring others in, like large corporations, to actually watch that happening. Because it may make sense for them to license your technologies.

Then, you can get it to market in that way, or you could do a greenfield startup. We’re also not averse — in fact, we’re very keen — to fund those things that are commercially viable today. And we’ve talked about various examples. There are some things that we think can get into the market today that can truly matter.

“In 2030, the projection is this will be an $800 billion to $1.1 trillion annual market. So it’s a big deal.”

Knowledge at Wharton: What kind of examples would you offer?

David: The best example that I am just so fond of using is cement. Today, cement manufacture represents 7% of global CO2 emissions — and that’s a big number. There’s a process today where we can use CO2  to create a calcium carbonate-based cement, which is structurally as integral as any other form of cement that’s made. It has price parity and it works; it is actually commercially viable. And it actually is 70% less emitive than the normal cement process.

If you could reduce that 7% by 70%, by just deploying this to the world, you could actually reduce global CO2 emissions today by 5%.

Knowledge at Wharton: When you add up all the different steps that you are planning to take, what’s the total impact on the environment and CO2 emissions that you expect to see?

David: At present, CO2 emissions are about 37 gigatons a year, which to put it into different terms, is about 1.2 billion garbage trucks worth of mass.

Knowledge at Wharton: That’s a lot of garbage trucks.

David: That’s a lot of garbage trucks, and it stays up in the atmosphere for hundreds of years. So we’re endeavoring to capture, frankly, as much as we possibly can, but our goal is at least 10% of the global annual emissions, which we’re hoping is north of 4 gigatons per year.

Knowledge at Wharton: You mentioned $50 million in funding commitments you’ve received so far. Where is the funding coming from and what are their incentives?

David: That’s a really good question. We think this is appealing to everyone, whether you’re an individual, a foundation, corporation, a government — we think that has appeal, and we’re seeing that that is the case. We do have funding from all of those sources that I just mentioned.

“CO2 emissions are about 37 gigatons a year … [that’s] about 1.2 billion garbage trucks worth of mass.”

Knowledge at Wharton: When you talk to potential funders, what are the main risks that you see in this program?

David: I flip it around, just as we’re saying: “How do you take carbon dioxide and transform it from a liability to an asset?”

The risk here is not doing this. We’re playing with the long-term health of not only the planet, but all the species that live on it. That’s the climate standpoint of things. Are there risks that some of these aren’t going to work? Absolutely. We know that. And we [still] have to go in.

As [Sun Microsystems co-founder] Vinod Khosla is fond of saying, “You need many shots on goal.” We’ve decided that this R&D is critical, it’s absolutely critical, especially if you look at [the climate change commitments] we’ve agreed to in Paris, which was to get to hopefully a 2 degree or 1.5 degree world. If you look at the INDCs [intended nationally determined contributions], which are what each of the individual countries has agreed to, we only get to a 3.5 degree world. So there’s a gap between 3.5 and 2 degrees. We, through our studies, have shown that we can capture enough CO2 to close about 20% of that gap.

So we think it’s very worthwhile.

Knowledge at Wharton: Are you getting a lot of interest from countries, as well as companies?

David: Absolutely. We’re seeing that there are certain countries that are enlightened; there are certain countries that actually realize that there is that gap and we need to find any and all solutions to deal with it. We’re big proponents of the “all of the above” strategy when it comes to a climate standpoint, but we’re also big proponents of sustainable solutions. I’m a businessperson — obviously, I went to Wharton. And I believe that the most sustainable solutions are those that have, in a capitalist society, economic value that’s created. That’s really what we’re driving to do.

Knowledge at Wharton: What’s been your biggest challenge so far and how have you dealt with it?

David: It’s really a knowledge-base issue. And it’s an awareness issue, too. There’s so much complexity in the world today. What we’re trying to do is convey not only the sense of urgency and need, which in itself is an educational aspect, but also that this is one of the critical pillars in solving the climate issues. The agreement that we all reached in Paris was fabulous. [Recently] there was a formal signing in New York City and that was great. And now, people are saying, “What do we do?”

“I believe that the most sustainable solutions are those that have, in a capitalist society, economic value that’s created.”

… And this is what we can do today to actually make a difference. … All of a sudden, we were aided by [the climate accord in] Paris because there wasn’t that same recognition [before]. But what happened actually accelerated interest and frankly, the commitments that we’re getting. … We’re just being besieged by interest, and that’s a good thing.

Knowledge at Wharton: If you were to fast-forward the next four or five years, where do you think you will be?

David: It’s an aspiration — we will have this ecosystem purring all over the world, and I mean all over the world. And we have everyone from individual high school students who consider themselves inventors; college students; researchers in labs; people who are tinkering in their garages actually working on solutions because they realize taking CO2 and using it as an asset to make things is actually beneficial. We’re hoping that it stimulates that kind of interest and excitement [and generates] hope. Because I have found in the 16 years I’ve been looking at the sustainability issue, that a lot of people have despair. They think, “What can I actually do?”

This is something you can do. So that’s exciting. My hope is that we’ll have labs all over the world with people working on it. At the same time, we’re hoping that there’s this massive commercialization, which obviously happens both through greenfielding of new startups, but also through adopting of technology that comes out of this R&D and has broad-scale applications.

We see ourselves reducing emissions through other vehicles, whether those are clean energy sources or energy efficiency, but we’re also capturing, and thus, reducing CO2 in the atmosphere on a permanent basis by using these products. So if we’re making headway, and if we get even halfway to that 10% goal that we’ve set in terms of utilization of the CO2, if we get to hundreds of billions of dollars worth of products, I’m a happy person.