Wealth Podcast Post

A Carbon Neutral Future with Justin Cochrane

George Grombacher May 14, 2022

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A Carbon Neutral Future with Justin Cochrane

LifeBlood: We talked about creating a carbon neutral future using carbon credits, how this investment opportunity actually works, how you can take part in it, and the impact it can have, with Justin Cochrane, Founder of Carbon Streaming.  

Listen to learn how you can start to have an impact on climate change with your consumer habits!

You can learn more about Justin at CarbonStreaming.com, Twitter and LinkedIn.

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Our Guests

George Grombacher


Justin Cochrane

Episode Transcript

george grombacher 0:00
Come on one level, this is George G. And the time is right to look at today’s guest strong and powerful. Justin Cochran. Just Justin, are you ready to do this?

Justin Cochrane 0:19
Very ready, George, thanks very much for having me.

george grombacher 0:21
I’m excited to have you on. Justin is the founder of carbon streaming an organization providing investors with a way to invest in a low carbon future and fight climate change. Justin, tell us a little bit about your personal life some more about your work and why you do what you

Justin Cochrane 0:37
do. Thanks. Thanks, George. So personal life, you know, married with two kids. And and it’s somewhat connected. Because, you know, I’m a finance guy I’ve spent my career was started out as an investment banker for 10 years and spent the last almost 15 years now in what we broadly call this royalty and streaming sector. And that was the royalty and streaming business model is a model that that has really grown through the mining and energy space, financing companies that are developing gold projects and silver projects in oil and gas projects around the world. And that’s where I got my start, I got my start in a company called Sandstorm gold, where I lead their corporate development team that was, you know, that was 12 years ago now. After my my investment banking career, and I had a belief that, that this royalty and streaming business model, which we can talk about that later, is just a model that can be applied to any commodity in the world. And I’ve spent the last six or seven years really focused on this theme around decarbonisation, the move from internal combustion engines to to electric vehicles. And it was about two and a half years ago, where I said, you know, what commodity Can we can we attach this royalty and streaming business model to and and carbon credits I’d known about, again, for the better part of seven years, and just thought it’d be a tremendous opportunity to use this royalty and streaming business model and finance projects around the world that were helping to fight climate change. And there was nobody else doing it in a meaningful way. These project developers were starved for capital starved for money and and, you know, in the spirit of creating a better a better future for our kids, which is where I started with with my two little girls. It’s just been something I’ve been very passionate about and excited about business.

george grombacher 2:34
Nice. I appreciate that. Can you tell us what carbon credits are?

Justin Cochrane 2:38
Yeah, so a carbon credit represents one metric tonne of carbon dioxide or carbon dioxide equivalents. Methane or nitrous oxide. And so every credit around the world where it’s traded represents that one one tonne of co2

george grombacher 2:57
Is that a lot of co2,

Justin Cochrane 2:59
that’s a lot of co2 yet 2200 pounds of co2. When you think of the average carbon footprint of a North American individual, it’s around 16 to 17 tonnes of co2 and that would be everything from you know, your house, your car, your jobs, you know, your your trips, you’re taking your your your food, your your consumer goods, so that footprint again, on average to 1617 times for per for individual

george grombacher 3:33
for lifetime, or per day,

Justin Cochrane 3:35
or a year. Sorry. For the middle per Yes, yes, for you

george grombacher 3:41
got it. Okay, and what is then one credit worth?

Justin Cochrane 3:48
So depends on the type of credit, there’s about 60 different types of of carbon credit projects in the world. So depends on the on the project depends on where of course that that reduction or avoidance happens. But somewhere between call it three times $3 per credit for your low grade, credit, and, you know, 30 or $35, a credit for your high grade credits. And this is within what I what we broadly call the voluntary carbon markets. If you look at regulated markets around the world, as an example, the EU regulated market there’s an 80 Euro price for credit. So there’s a pretty wide range which, which again, makes it makes it hard for for, for investors to sort of pick see one price for this commodity. It’s not like the gold price where you can pull it up and it’s $1,900 an ounce. But it’s also what creates the opportunity because this is amazing projects in different jurisdictions. Each project is unique. And again, it’s one of the reasons why why investors historically have shied away from This space where we add carbon three means you see a tremendous opportunity to accelerate this market.

george grombacher 5:06
Nice. So maybe maybe an example of one of these projects and sort of walk me through what the, what the benefit is environmentally, and then what the investment opportunity is, because I wish that we would all just do this stuff out of the goodness of our hearts. But I know that when we’re able to align financial incentive, which which which we need here in the United States, we are a capitalist economy, and I’m a capitalist. So with a desire to do good, that’s when things actually happen.

Justin Cochrane 5:40
Without question without question, so let me walk you through our room Mariah project. It’s just a fantastic example of the kind of work we’re doing and the types of projects that we’re looking for. So Rimba Raya is is a forest conservation peat swamp conservation project in Borneo, Indonesia. It protects 64,000 hectares of of local low lying peat swamps and what is protecting it from is being converted into a palm oil plantation. So 10 years ago, this property was was was federally gazetted to be turned into a palm oil plantation with where they slash and burn the entire pitsuwan. And our partners here, infinite earth came in and protected this in partnership with the government protected this 64,000 hectares of peat swamp. And what that does now, is it because they’re protecting it, it’s protecting, you’re preventing the emission of three and a half million tons of co2 on an annual basis. That is a massive amount of carbon emissions. And so what they’re able to do through the project activities and the project activities here, through the protection through the protection program are providing job training and education and a floating medical clinic to the three large communities is providing clean power, clean water, micro finance for women led programs, eyeglasses to the local community where they’d never, you know, never even heard of eyeglasses before. So it does these amazing things, protecting, you know, investing in the local community and protecting an endangered orangutangs, the Bernina Ranga Tang, one of the few few remaining sites where this orangutan flourishes. So this project does these amazing things. And because it’s because it’s avoiding the emission of preventing the emission of three and a half million tons of carbon dioxide a year, it gets to issue three and a half million credits. And so that’s where we come in at carbon streaming is we invested $45 million in partnership with infinite earth that the team behind this, they’re using that capital to invest in those those community programs that I talked about. And we’ve entered into a 10 year strategic alliance to do this in other parts of the world. And in exchange for our $45 million investment, we we then turn around and sell those three and a half million credits to global buyers around the world. So we’ve got delta and Gucci and PwC and Volkswagen Impax Energy Corp these these global businesses as major buyers of our credits. And and then again, we we actually turn around and give about 75 to 85% of that revenue back to back to the project. So it’s it’s a bit of we help them monetize and market they’re their credits, share the majority of their revenue back to the project developer and our profit on that $45 million investment is that that spread of 15 to 25%, which is what we keep. So that’s the economics. And as we look out 1020 30 years and this is a 30 year project, we believe carbon prices are going to be much higher, we need met we need billions and billions, hundreds of billions of dollars of of capital to further this industry. And remember, is just a fantastic example of how this money can be put to work.

george grombacher 9:30
Nice, cool, and well. Well explained. Thank you, I think I think I actually understand it. So. Alright, so that is the one of those woodwinds for for planet Earth and for the orangutangs and for the local community and for just just for everybody. So you turn you sell the credit to to, to an airline. How does what do they do with it? How does that benefit them?

Justin Cochrane 9:59
So So But what delta in this example would use that use those credits for is to meet its sustainability goals. So what you see and and over 90% of s&p 500 companies now have a sustainability report where they have, they’re setting out their ESG priorities over the next couple of decades. And within those sustainability reports, not enough of but companies like delta will have commitments to reducing and offsetting their emissions as an airline, of course, you can imagine it’s, it’s tough to, you know, flip a switch and reduce emissions. So what they do is, as they have a plan over the next 2020 to 30 years to start using sustainable fuels, and reduce emissions in the meantime, they’re buying what we call these, these carbon offsets to offset the emissions that they produced and support conservation efforts in this in this case, which is, you know, incredibly, incredibly important. If we look at if we look at deforestation around the world, it would be the second largest country as an emitter only behind China is responsible for upwards of 8 billion tons of emissions on an annual basis and so incredibly crucial that we protect the world’s forests, and then deforestation. And and companies like delta are taking a lead in in supporting projects like that.

george grombacher 11:28
Nice. I appreciate that.

Unknown Speaker 11:30
So is this

george grombacher 11:33
for lack of a better term? I’m not sure what the universal term would be, but a bipartisan issue where every side of the political spectrum says this is good, or is there pushback?

Justin Cochrane 11:46
So I would say 10 years ago, George, there was a relatively, you know, there was a relative a high amount of pushback, and it wasn’t bipartisan. I would say what we’ve seen in the last one to two years, certainly in North America is sort of finally the recognition that climate change is here, that we need to do something about it. You just have to look around the world for you know, it’s it seems like every day there’s there’s a new tornado or hurricane or atmospheric river, or, you know, you name it. And and so, it seems now to significant bipartisan support. We’re seeing that in Canada, and I think we’re starting to see it in the US.

george grombacher 12:31
Got it. I think we’re gonna have to have you back on to do a podcast about atmospheric rivers because it sounds sounds awesome. I’m sure it’s not. It’s not good

Justin Cochrane 12:40
was we had them on the west coast in Canada here. And it was, it was horrendous.

george grombacher 12:47
So how do how do ordinary investors participate? Or accredited investors?

Justin Cochrane 12:54
Yeah, so so uniquely, what we did when we started carbon streaming is we wanted to have a public market angle to this, we wanted the, the public to be able to participate in investing in supporting these carbon projects around the world. So we were the first company to launch launch publicly that was in July last year. So we’re listed on the Neo exchange in Canada under the symbol ne t. Zed nets for Net Zero. We’re also pursuing a US listing here on the NASDAQ, which were you know, knock on wood hoping happen sometime in the next month or two, subject to obviously NASDAQ and SEC review timetables. But again, hoping to list on the NASDAQ the symbol there would be offset. So all Fs T is is what we’re pursuing here in the next couple of months. So they can go in a place. I’m just gonna say so so companies can get so investors if they’re interested can can can check out those two tickers. We also have a tremendous website that provides a lot of information and blogs and backgrounds on on carbon in our projects and the kind of work that we’re doing.

george grombacher 14:11
Nice. What is the investment objective? If if I were to go and buy a share of nets on the Neo exchange, what what is my desired result? Is it appreciation is it income?

Justin Cochrane 14:28
So it’s it’s both it’s its appreciation in the short term. And as we diversify the portfolio and start generating credits from dozens and dozens of projects, we’ll certainly be looking to start paying a dividend. But as a as a company, our goal is to build this diversified portfolio of projects around the world different project types, not only nature based projects, so we are looking at renewable energy and biofuels reforestation projects. Biochar projects cookstoves in Africa. So really building that diversified portfolio of projects, and becoming the go to name for buyers like delta around the world looking to buy voluntary offsets

george grombacher 15:14
of it. Justin, people are ready for that difference making tip do you have for them?

Justin Cochrane 15:20
Well, what I would encourage your listeners to think about is, is how do we as individuals start to think about how we impact climate change. This is an issue that’s going to take government corporate, and individual action to really make a difference. And so what I love about this industry, and what a lot of people aren’t thinking about is how do we start to attach carbon credits carbon offsets, to products that consumers are buying. As an example, I picked up an Evian water bottle the other day, and on the side of the Evian water bottle, it says carbon neutral. It’s one of the first examples I’ve seen of a consumer product that was carbon neutral. And so I would encourage listeners to start thinking about how they can support companies that are taking an active approach in fighting climate change, reducing their carbon footprint. I think Evian you know, that was a perfect example. Delta Airlines, again, been a major supporter of this industry, shell as an oil and gas company has been a major supporter of this industry. But we as individuals can can start to recognize what those companies are doing and supporting those companies. And of course, individuals can start buying carbon credits as well. And that’s a functionality that we have yet to build into our website, on our projects, but something we’ll look to do before the end of the year, so that individuals can go and even think about offsetting your carbon footprint.

george grombacher 16:57
Well, I think that that is great stuff that definitely gets come up. Justin, thank thank you so much for coming on. Give us the website and that the tickers again.

Justin Cochrane 17:06
Yet, so the website is carbon streaming.com. And the two tickers on the Neo exchange is net Zed. So for net zero so and et Zed and on the NASDAQ will be oh f s t for offset OH S S T.

george grombacher 17:26
Excellent. If you enjoyed this as much as I did, so just an appreciation and share today’s show with a friend who also appreciates good ideas go to carbon streaming.com and learn more about everything that Justin is working on. You can find them on the Neo exchange under the ticker and etc. and the NASDAQ eventually at of S T. Thanks, Justin.

Justin Cochrane 17:52
Thanks very much George for having me. Really appreciate it.

george grombacher 17:54
And until next time, keep fighting the good fight. We’re all in this together.

Transcribed by https://otter.ai

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