Podcast
33
min read

🎧 #157: Case Study: Decarbonization on the WattCarbon Marketplace

November 9, 2023
"We're on sort of a 300 year time frame right now for decarbonizing buildings, and we have about 30. Like honestly, right? So, so what we really need is, you know, more Alans and more DRs, tackling this problem so that we can reach those customers in the moment in which they're ready to make that replacement and make sure that they're opting for the lower carbon option.”

—McGee Young

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Episode 157 is a conversation with McGee Young from WattCarbon, Alan Greenberg from GreenSoil Investments, and DR Richardson from Elephant Energy.

Summary

Episode 157 features McGee Young from WattCarbon, Alan Greenberg, and DR Richardson from Elephant Energy and is our 7th episode in the Case Study series looking at real-life, large-scale deployments of smart building technologies. These are not marketing fluff stories, these are lessons from leaders that others can put into use in their smart buildings programs. This conversation explores how WattCarbon can bridge the gap for property owners and vendors, while simultaneously validating their decarbonization efforts. Enjoy!

Mentions and Links

  1. WattCarbon (1:05)
  2. Elephant Energy (1:30)
  3. GreenSoil Investments (6:00)
  4. Nexus Podcast #120 (11:10)
  5. Solar Holler (17:52)
  6. Leap (17:55)
  7. Bloc Power (18:00)
  8. Quick Carbon (18:11)
  9. Recurve (18:58)
  10. Vision Ridge Partners (20:25)
  11. EVgo (20:42)

You can find McGee, Alan, and DR on LinkedIn.

Highlights

Overview (0:51)

Introduction to DR Richardson (1:40)

Where is the decarbonization effort at today (9:12)

Introduction to McGee Young (11:20)

What types of companies are on that side (17:28)

Calculation of carbon savings (18:32)

How does this help decarbonize homes faster (25:26)

Reflections on the conversation (28:25)

What would you say to others considering their options (30:35)




Music credits: There Is A Reality by Common Tiger—licensed under an Music Vine Limited Pro Standard License ID: S502007-15083.

Full transcript

Note: transcript was created using an imperfect machine learning tool and lightly edited by a human (so you can get the gist). Please forgive errors!

[00:00:00] McGee Young: We're on sort of a 300 year time frame right now for decarbonizing buildings. And we have about 30, like honestly, right? So, so what we really need is, you know, more Alans and more DRs. Uh, tackling this problem so that we can reach those customers in the moment in which they're ready to make that replacement and make sure that they're opting for the lower carbon option.

[00:00:26] James Dice: Hey friends, if you like the Nexus podcast, the best way to continue the learning is to join our community. There are three ways to do that. First, you can join the Nexus Pro Membership. It's our global community of smart building professionals. We have monthly events, paywall deep dive content, and a private chat room, and it's just 35 a month.

[00:00:43] Second, you can upgrade from the Pro Membership to our courses offering. It's headlined by our flagship course, the Smart Building Strategist. And we're building a catalog of courses taught by world leading experts on each topic under the Smart Buildings umbrella. Third and finally, our marketplace is how we [00:01:00] connect leading vendors with buyers looking for their solutions.

[00:01:03] The links are below in the show notes, and now let's go on to the podcast.

[00:01:10] All right, welcome to the Nexus podcast. This is the latest episode in our series, diving into case studies of real life deployments of smart building, and in this case, decarbonization technologies. Today we have a story coming from the WattCarbon Marketplace, and we've heard from McGee Young, co founder and CEO of WattCarbon in the past.

[00:01:29] He's now back with a few of his friends here. We have Alan Greenburg a seasoned investor, developer, and manager of real estate with a passion and sort of history of incorporating technology and sustainability into his developments. Alan's here to share the story of how his firm purchased carbon offsets on the WattCarbon Marketplace.

[00:01:46] We also have DR Richardson, co founder of Elephant Energy. DR is here to tell the story of where Alan's money goes once the offsets are purchased. So let's start with you, Alan. Can you, um, tell us a little bit of your background? [00:02:00]

[00:02:00] Alan Greenberg: Sure.

[00:02:00] Uh, good afternoon. Thanks for including me for today. Uh, my background is from a real estate family, got involved in our business, uh, in my early twenties.

[00:02:10] Later on, um, one of my responsibilities. In 1998, I took over management of our 15, 000 rental units based here in Ontario, between Toronto and Ottawa, and I quickly understood that there was a malaise in our company and across the industry in that we were consuming resources. And everybody just paid the utility bills.

[00:02:38] In fact, to get the 2 percent discount, because in those days it used to be 2. 10 net 30, we had 32 people that were authorized to sign a utility check so we could get the 2 percent discount if we paid it quickly. Well, when I took over responsibility, they told me it was a non controllable expects. And I came back the next day, we went through [00:03:00] the P& L again, consolidated P& L.

[00:03:02] And again, they told me that utilities were a non controllable expense. And I said, I don't agree. I don't accept that. We have to be able to control our utilities. So, over the course of, uh, the next 6 to 12 months, put together a team called the Minto Green Team. And, um, I developed a concept called a Comprehensive Natural Resource Management Plan.

[00:03:26] And it was simple. We had an addiction to consuming utilities and other natural resources. And we just bought them, we just spent, we did it. So, anytime you have an addiction, first you have to learn about your addiction before you can cure that addiction. So it was an awareness program. When were we consuming resources in our buildings?

[00:03:48] When were we consuming resources in our office? And I realized that we were wasting a lot. I didn't know how to solve the problem, but I knew we were [00:04:00] wasting a lot. And it really came down to a mathematical equation. What's the cost of consuming a natural resource? What's the cost of reducing that spend?

[00:04:12] What's the economic return? And I use two simple examples. Number one is we all have chargers for our electric toothbrushes. I brush my teeth every day. But I don't leave it plugged into the wall. I unplug it. And every three nights, every third night, I plug it in, I charge it overnight, and then I use it for three days and then I charge again.

[00:04:35] And the second little pet peeve I have is chargers for all of our phones. We leave them plugged into the wall. When my kids come over and they borrow our charging stations, I go around pulling them out of the wall when they leave, because we're wasting. So a lot of change can happen by changing natural behaviors, becoming aware of our addiction.

[00:04:57] But the other part of it is... We have to [00:05:00] change what goes on in a building. So, fresh air vents start at the roof of an apartment building, blows fresh air down. In those days, there was a little, uh, opening under the doors, and the fresh air would come from the roof to the floor, the typical floor, the, uh, corridor, push it underneath and push the smelly air outside.

[00:05:22] But it was either on or off. So I understood at 5 o'clock, when people started to come home and cook, why they needed 100 percent fresh air being pumped in. But at 3 o'clock in the morning, that machine is still going 100%, but nobody needs it. So we went and put in variable speed drives. We got our money back in three and a half years, on buildings that my grandchildren were going to own.

[00:05:47] So after I paid back, The capital investment, which by the way, 33 percent or 30%, not a bad return on an unlevered basis. But after three and a half years, [00:06:00] we weren't, we got all our money back. And then the savings were forever. So that's how I got into this called a comprehensive natural resource management plan.

[00:06:10] And the rest is, uh, the rest is history. I left our family business as an operator in 2011. I started, uh, co founded a venture capital firm called Green Soil Investments. We started, uh, in Israel in food and ag tech, cutting out waste in those industries. And in, uh, 2015, we launched one of the world's first PropTech funds.

[00:06:32] Nobody knew what PropTech was when we started. Uh, I didn't even understand what PropTech was. We knew that we're going to make operating and running buildings and anything to do with real estate more efficient. Um, we've raised about 140 million between our two first two funds, uh, in the PropTech world, about 20, 20 odd companies that we've invested in.

[00:06:54] We've had a few exits. It is venture capital. We've written off a few investments as well. [00:07:00] One of the advantages we have is that my skill set is not as a venture capital investor. My skill set is as a user of real estate. How can we make that real estate more efficient? Uh, and now in the second half of our second fund, we are totally committed to investing in technologies and services.

[00:07:23] That help decarbonize the built

[00:07:24] for

[00:07:25] James Dice: great intro. Thanks for that. It's, uh, you have such a unique perspective, you know, I I've made the energy efficiency, uh, push from the outside, but it seems like you've definitely made it from the inside. That's probably a lot easier to do, uh, when you speak the language and, you know, maybe are also in the family.

[00:07:45] Alan Greenberg: One of the cool things that happened is as we started over the years, doing more and more and more and more, and then. And this division that I set up for property management, for income producing assets, took over and it became a corporate [00:08:00] service where all of our new homes, all of our condos, all of our office buildings, all our new construction started to get this.

[00:08:07] We set up something called the Minto, uh, the Minto Green Team, but Green Champions. And almost 10 percent of our workforce responded with ideas. On how we could reduce consumption of natural resources. From little things like double sided photocopying, to packaging, just all these little things. And then we started to give out bonuses for the savings.

[00:08:37] And I know there was one person in particular, he got like a 75, 000 bonus in 2005 2006. Because he came up with this brilliant idea. Right? And like we had these green champions, people that cared about our environment and about reducing consumption. We were able to empower our frontline [00:09:00] staff. So the DNA of Minto, even today, and I haven't worked there in about 12 years, and I'm no longer an owner in the family business.

[00:09:07] But because it started at the top, we were able to create a DNA of our company. Culture of our company focused on reducing consumption of natural resources. Cool.

[00:09:21] James Dice: So let's talk about where this is at today. So the way I understand it is the, the building that your office or offices are housed in, you guys have set out to decarbonize that building and have purchased offsets, um, to do so.

[00:09:35] Can you talk about that? Um, effort.

[00:09:37] Alan Greenberg: We bought the building in, uh, 2021. Uh, and it was a pretty efficient building from a electrical, uh, consumption point of view and gas consumption. Uh, and we've continued to encourage, uh, the property manager to continue, uh, along the path. And we have actually tried some new technologies in this building.

[00:09:59] [00:10:00] Uh, as beta testing, uh, before we actually would invest in a company, tried them out in the office building. But, you know, we weren't getting a, the goal we had was, how do we get to net zero? And, we were pretty close, but we weren't there. And, we didn't really understand carbon credits, and offsets, and all that type of stuff.

[00:10:18] And then, Through GreenSoil, we got exposed to WattCarbon, to McGee, and, and, um, I remember meeting him in California and, uh, we got very excited about his company and we got excited because we could see the benefits that was going to bring to the whole industry. But as a user of real estate, this was a tool that would allow us in our own real estate.

[00:10:42] To get to net zero to bridge the gap between what we could do retrofitting a building economically and then the balance of it by buying offsets. So we're thrilled to be one of the first customers. Uh, of what carbon and we're lucky. Our [00:11:00] office building has maybe 1 percent vacancy. Um, and we do have some renewals coming up.

[00:11:07] So we thought it was important to get ahead of the game and start promoting yourself as a net zero building, uh, based on what we do and then adding in what carbons offsets.

[00:11:19] James Dice: All right. So let's bring in you, McGee now. Um, can you introduce yourself again for people that haven't heard your episode? We'll link to the first episode with you in the show notes.

[00:11:29] It kind of went through the history of a company, kind of what you guys are special at. And, uh, we told the story of your career and that kind of thing. Um, so quick introduction for those people that haven't heard that.

[00:11:41] McGee Young: Sure. Thanks, James. And, uh, thanks, Alan and DR. I had been working, uh, in the, in the space of measurement and verification.

[00:11:48] Building software for utilities to measure the impacts of their energy efficiency programs. And realize that this was sort of the big unlock for, um, for [00:12:00] decarbonization, right? We've got roughly 40 percent of emissions are traceable back to buildings. Um, and of those about 70 percent happen on the demand side.

[00:12:10] Uh, so we've, you know, we've invested heavily in fact, in, in renewables on this, on the supply side, we've got large solar and wind farms going in left and right. If you fly across the country nowadays, fly over Iowa, all you see is wind farms. Uh, but you go into buildings and you see a lot of legacy fossil fuel equipment.

[00:12:27] And, um, and like Alan, uh, most of us haven't chosen to have that equipment in our buildings. Um, it was, it was there when we got there, uh, when, when we bought the, the place. And oftentimes it's, it's running pretty well, uh, and, and so we don't necessarily want to tear it out in the moment. Um, but we do have this aspiration of, of trying to do our part to, uh, reduce, reduce emissions.

[00:12:54] And so, uh, we, we set up WattCarbon as a way to provide a pathway to climate action that ran [00:13:00] through, directly through the sector that's most responsible for the, the largest sector responsible for emissions and that's our buildings. So if you want to have an impact on climate change, there's no better place to start than in the built environment.

[00:13:14] Now, the reason why we're not really investing in buildings is kind of threefold. Number one is, we don't really have great data systems to measure and manage building emissions. We typically focus on energy bills, but our utilities do a pretty poor job of connecting the dots for us. Maybe because they don't want us to really understand that, or maybe just because they can't.

[00:13:36] Uh, but nonetheless, um, it's really hard for even, you know, sophisticated real estate owners like Alan to even know what his carbon footprint is, um, much less, you know, what to do about it. Um, so for us, you know, it started with building a platform that was capable of tracking the hourly carbon emissions for every single building in the United States on demand and in real time so that we actually had the data infrastructure we needed to [00:14:00] do something about this problem.

[00:14:02] Now, the second barrier is that our environmental commodity markets are mostly focused on carbon offsets from, or nature based solutions. So the idea is that we're going to be pumping this carbon out, but we, if we can just absorb enough of it, um, we'll be okay. And frankly, there's, we can't plant enough trees, uh, to solve this problem.

[00:14:22] And it's, It's kind of like if your bathtub was overflowing, sure, you want to put some towels on the floor to, to mop up the water, but first thing you want to do is turn off the tap. Uh, and so our goal was to kind of rebuild environmental commodity markets with a focus on turning off the tap. How do we eliminate carbon emissions from buildings in the first place?

[00:14:42] The third barrier is, um, Alan kind of, uh, referenced it, is that while there are cash flows associated with, Doing most energy projects. Decarbonization makes money. Energy efficiency makes money. Oftentimes, there are upfront costs, and to do a project of any [00:15:00] size requires capital. And, um, most of us, if we want to do something like this, are taking out a home equity line of credit, or putting it on our credit card, or we might have enough savings built up.

[00:15:13] And folks like DR are out there making the sell that, hey, we should be decarbonizing, but the, the financing costs oftentimes make it impossible to, to, to get these projects to pencil out. And so we really need to rebuild the capital stack for investing in buildings. Part of that is by, um, if we can reorganize our, our environmental commodity markets to make it actually valuable to decarbonize, to recognize the value of decarbonizing a building, um, then it can allow, you know, a company like Allen's.

[00:15:44] Uh, to offset its emissions by helping a company like DR's actually go out and do projects. And so, Alan's made an advanced market commitment, which means that he's said to DR, hey, Now, not to DR directly, [00:16:00] we aggregate these guys together, so he doesn't get to pick and choose exactly who he's getting, but thanks to DR for signing up.

[00:16:06] But he says, hey, if you can reduce carbon emissions, we'll make a commitment to buy, uh, you know, X number of tons of those emissions. But we're only going to pay for what you actually end up reducing. We're not just sort of out here funding on a whim and a prayer or something like that. Um, and so we go do

[00:16:32] decarbonization projects in buildings, uh, we'll quantify those emissions reductions and pay you per ton of carbon that you're able to reduce. And what that allows DR to do is to go to his customers and say, Hey, I've got a deal for you. If you do this, do this project with us, uh, we can take, uh, and, and, and it's up to DR to decide exactly how he wants to do this.

[00:16:56] So I'll let him speak to his, his plan specifically, but he knows [00:17:00] ahead of time that he'll get paid. For the emission reductions and so he can work that into his proposals to his customers. However, however, he it makes the most sense for him. His goal is to do more decarbonization and he knows that the more of these projects that he can do, uh, the more his company will grow.

[00:17:17] And so. So, that's our goal, is to unlock building decarbonization at scale by providing the data infrastructure required to know that it's really happening for real. To rebuild our commodity markets so that we can actually value decarbonization as a thing in and of itself. And number three, rebuild the capital stack so it's easier for companies like DR to go out and do the good work that they're doing.

[00:17:40] James Dice: Totally. And, and when you talk about the others besides DR, so what types of companies are on that supply side of the marketplace?

[00:17:47] McGee Young: Yeah, great question. Um, there's kind of two pathways to to decarbonizing buildings. One is through the grid and the other is directly through the building. So through the grid, we can put on solar panels, [00:18:00] we can enable demand response and and either batteries and load shifting.

[00:18:05] And so we've got some companies that focus on putting a company we work with called Solar Holler puts on solar panels and homes in West Virginia. We've got companies like Leap that are enabling demand response. On the building electrification side, uh, obviously Elephant Energy. BlocPower, um, is a great company that we work with out on the East Coast.

[00:18:26] Quick Carbon, um, is helping to decarbonize homes on the West Coast. So really, you know, any type of, of company that's out decarbonizing buildings, whether it's directly through electrification or indirectly through, uh, the grid, um, as it were, um, all of it is part and parcel of, of how we achieve these goals.

[00:18:47] James Dice: One last question for you, McGee. Before we bring Dr in the, can you talk about the calculation? So how does the technology work to actually quantify the amount of carbon savings?

[00:18:56] McGee Young: Yeah, so we, we require DR to submit [00:19:00] meter data from his, from his buildings and, uh, we use measurement and verification protocols that are open source, uh, that are derived from decades of, of, um, practitioners developing in, in the world.

[00:19:14] So this is the work that I did at my last company, Recurve, we built, um, open source software and, and methods so that you didn't just have to take my word for it, that this, you know, Alan, Alan, trust me, of course, but, you know, I don't want him to, to just, you know, we want this to be like a P& L, right, where you can actually look and see, like, what's actually happening.

[00:19:36] And traceable back to the actual buildings where this, where this, uh, where the decarbonization happens. So, in fact, not only are we measuring, uh, quite precisely using actual meter data, but we've set up an entire registry. So that every gram, every watt hour of electricity that is, that is saved, um, is recorded and given a serial number.

[00:19:58] So as Alan goes and makes [00:20:00] his claim for, hey, I've got a net zero building and some... You know, some customer or some irregulatory, you know, agency says, ah, we'll prove it. Well, he just dials into his WattCarbon platform and pulls up the actual certificates, uh, that are connected to the particular projects that got done.

[00:20:20] Um, so that all sides have confidence that the numbers are real.

[00:20:24] James Dice: Okay, DR, welcome, welcome to the show. Good to see you again. Um, can you give us a little of your background and talk about Elephant Energy and how, and what, sort of what you guys do?

[00:20:32] DR Richardson: Yeah, thanks everyone. Uh, really excited to be here. So, my background briefly is in private equity.

[00:20:40] I spent a decade helping build a firm called Vision Ridge Partners based in Boulder, Colorado. Where the firm has a couple billion under management, I'll focus on investing in sustainable real assets. So we invested in and owned, uh, direct solar projects, both in the US, Japan, Taiwan. We also [00:21:00] owned EVgo, the fast charge network for electric vehicles, for a number of years.

[00:21:03] Um, we owned some ag and water assets, foreign gas. The firm now has a fleet of Norwegian electric ferries. So I spent a decade helping build this platform to try to invest in real, uh, assets that were at the center and at the core of the energy transition, where there was not technology risk, but where the unit economics, the fundamental math of the asset just made a lot of sense where we could be deploying capital, be making a really good risk adjusted return, and be playing a fundamental, uh, role in the energy transition by.

[00:21:39] Um, de risking, uh, these assets and these platforms at scale. And I, I really enjoyed that work, did it for, for a decade, and, uh, accidentally got the startup bug by working closely with some of the entrepreneurs that we were investing in and supporting. And decided I wanted to go build a platform that took a lot of those same [00:22:00] principles, um, to the market and do it in a way that was going to have a lot of impact.

[00:22:05] So I started Elephant Energy, uh, with a good friend of mine who'd spent his career as a clean tech operator, um, building solar projects, building solar manufacturing plants, uh, deploying autonomous electric vehicles. Whole, whole range of different types of, um, uh, deploying those assets. And he and I, between our two backgrounds, have, uh, figured out what is an asset where you don't have to take a lot of risk on, where you understand the internet economics, where the technology is proven, how do you go scale that?

[00:22:35] Um, and so that's really the, the idea behind Ellicent is how do we make a really big impact by using the tools of capitalism? to accelerate the energy transition. We were trying a bunch of different business models, uh, working with consumers to try to make their homes more climate friendly. That's what we wanted to do.

[00:22:53] We had a bunch of ideas, and we tried a bunch and all those ideas failed. And then the, the thing that [00:23:00] um, our, our homeowners kept saying to us though was, what about heat pumps? Tell us about heat pumps. How do we install a heat pump? And so we decided to listen to that customer feedback. And I had a 17 year old centrally ducted gas furnace at my house in Colorado.

[00:23:16] And we said, how hard can it be? Uh, we'll, we'll, we'll deploy a heat pump. And it turns out it was really hard to deploy a heat pump. Every single part of the deploy heat pump was hard. Uh, what OEM, what technology were we going to use? How can we find a qualified vetted contractor? What rebates would we qualify for?

[00:23:37] Did the contractor also have an electrician? Would that be permitted? Uh, did the electrician come in the cost? And how do we know, in Colorado it gets really cold. How do we know that the equipment is going to work year round? So just every single thing, you know, two of us are former clean tech operators and builders, and we were really struggling [00:24:00] to deploy one heat pump.

[00:24:01] And we said, if two of us were effectively unemployed trying to build a business, we can't figure out how to deploy this heat pump. You know, your average homeowner is, is no, uh, is completely, um, out of luck. It's, it's going to be impossible. They've got jobs. They've got kids, you know, it's going to be challenging.

[00:24:17] So that, that was our aha moment of the world needs a platform that can make creating your home to be more climate friendly, uh, in a way that is simple, that lets you do it confidently, that, you know, you're going to be warm. In the winter with, and it's going to be installed at a high quality and that is simple, right?

[00:24:38] One simple transaction, um, you're a frictionless purchase experience where everything's taken care of. You've maximized all the financial rebates incentives available to you. Um, and that it's a good fair price. If you bring price simplicity and confidence all together, you can unlock an interesting business opportunity.

[00:24:57] That was our initial insight, um, since then at [00:25:00] Elephant Energy, um, over the past year and 10 months, we have upgraded about 300 homes in, uh, Colorado, and we recently launched our Massachusetts market as well, um, where we install heat pumps, heat pump water heaters, we do EV chargers, we do insulation, weatherization upgrades, And again, with that sort of very simple formula of how do we make this the most affordable, simple, and confident purchase and upgrade a homeowner can do to make their home more climate friendly.

[00:25:32] James Dice: Um, I have been one of those people that has tried to install a heat pump and I second you, it's not easy. Um, so can you talk about in context with this marketplace conversation, how is it helping homeowners? To get this money coming from the demand side or the buyer side, like Allen is providing into that pool of buyer money.

[00:25:54] How does that help you? You decarbonize these homes faster?

[00:25:57] DR Richardson: Yeah. So let's talk about [00:26:00] price. So a heat palm immediately from a decarbonization perspective provides about a 25 to 30 percent carbon reduction for an average home here in Colorado, even though we have a bunch of coal on the grid. Uh, it's so much more efficient.

[00:26:15] That's replacing a gas appliance with an electric one reduces the carbon intensity of that hour. So there's a very obvious decarbonization story to be told here, especially as the grid gets greener. But that comes at the expensive price. Heat pump installs right now without any rebates or financial incentives are more expensive Then replacing a gas furnace plus AC.

[00:26:39] Do exist right now in number of rebates and financial incentives. And in all the markets that we operate in, that actually brings the cost of a heat pump down below the cost of a gas furnace plus AC, if you're going to be replacing both things. So there's a positive economic story for most homeowners when they need to retire their [00:27:00] gas furnace and their AC.

[00:27:01] They can do so at a lower cost, both upfront and operating with a heat power. Um, that being said, it's still more expensive than if you're going to do furnace alone or an AC alone. And so what we're doing as a business is we're trying to be very focused on that North star of how do you create the simplest frictionless install for homeowners?

[00:27:23] We have to decarbonize, we have to defossil fuel, uh, 60 plus million homes in the U S and we have to do that as fast as possible. The only way that happens is if it's a brain dead economic decision every single time. And so we see platforms like WattCarbons, um, and the purchases that Allen is making as a really critical component to be continuing to drive the cost down, um, for people to take advantage of the fact that they are decarbonizing.

[00:27:52] They are upgrading their homes to be more climate friendly. And every, every little piece that we can assemble along the way to make that, [00:28:00] uh, drive that price farther down to make it simpler and easier for homeowners to decarbonize, the better, uh, the business we're going to build and the faster we're going to decarbonize and accelerate electrification.

[00:28:11] James Dice: Awesome. Makes a ton of sense. Um, Let's just talk between the four of us now. Um, basically the summary is if people are sort of thick in the skull or they're doing something else while they're listening to this. Buyers like Alan are throwing money into the pool. McGee is sitting in the middle of this, right?

[00:28:30] Making sure that the savings happen. Calculating the carbon. Assembling the supply side. DR and Elephant Energy are one of the suppliers on the marketplace that is actually doing the decarbonization. Um, Do you guys have any reflections upon this conversation and now that we've sort of gone through the whole life cycle of the transaction?

[00:28:48] McGee Young: I'm just thrilled to sort of sit here and listen to the two of them together, you know, talking about this is, you know, Alan wants to make a difference in the world, right? Has been committed to this for decades. [00:29:00] Uh, DR has been figuring out how to make a difference in the world. Uh, but Alan could never help, go help people install heat pumps in their homes in, in Colorado.

[00:29:09] And, uh, and DR doesn't have, you know, isn't sitting on, uh, on a bunch of commercial real estate, uh, either. And, and, and so, but the Earth doesn't care. Right, the climate doesn't care where these emission reductions come from. Uh, so if Allen can, can help accelerate the decarbonization of buildings in Colorado, and maybe somebody in Colorado can help accelerate the decarbonization of buildings in Toronto, if we can pick off the ones that are in the moment ready for a replacement, that's going to be the difference maker.

[00:29:43] We, we replaced 20, 000, 20, 000 fossil fuel heaters. And water heaters every single day in the United States with another fossil fuel heater or water heater. 20, 000 a day. Every single day [00:30:00] that will trap that are going to lock in emissions for the next, you know, 30 years each, right? That's that's billions of tons of co2 that we're just guaranteeing The thing is is we've got it we've got and we're on we're on sort of a 300 year time frame right now for decarbonizing Buildings and we have about 30 like honestly, right?

[00:30:19] So so what we really need is, you know more Allens and more DR's Tackling this problem so that we can reach those customers in the moment in which they're ready to make that replacement and make sure that they're opting for the lower carbon option.

[00:30:35] James Dice: Alan, what would you say to the folks out there that are looking at their offset options?

[00:30:39] You know, they've gone through this decarbonization roadmap in their buildings and they're saying, okay, we need to, we need to offset something here to get to net zero. Like you said, what would you say to them in terms of this being an option for them?

[00:30:52] Alan Greenberg: What I was You know, marketing sustainable condos, you know, in 2008, 9, 10, we [00:31:00] called it greenwashing.

[00:31:02] There were a lot of people making claims that were bullshit, and we knew we were doing the real thing. And from what I've been, some of the readings over the last few years is that a lot of multinationals were buying offsets, probably more plant based offsets. Without truly understanding the life cycle benefit or lack of benefit as in the later years, you, you invest in a tree farm and then you cut down the trees after 18 years, uh, or whatever the growth is.

[00:31:34] So what I really like about focusing on the built form, I think is great, uh, and, and the verification tools that McGee has come up with, so that with confidence. When I buy that offset and if I ever get on it, it's there. I think back on, on the millions of dollars [00:32:00] that we spent in our buildings and the reduction in consumption that we've done over the last 20 years, 25 years.

[00:32:09] We know it, but it's never really been verified. I wish WattCarbon was here 20 years ago, right? And, and so we could verify what we did in our portfolio, get what financially helped us with the returns we were getting because we just, all the equipment and buildings and all that type of stuff. I'm not sure.

[00:32:32] I mean, it would have helped the financial returns back then, if things were a lot, utilities were a lot less expensive, paybacks were quicker, but I, I really wish we had WattCarbon from day one. I wish in 1998, when I said, no way we can control utilities, I wish we had a WattCarbon shoulder to shoulder with us, uh, that would have helped us.

[00:32:54] Verify it all and make the economics better for us and I could have as much [00:33:00] of a green champion that I personally have been, you know, we, I think we could have created a lot more green champions had what carbon existed. So, um, I remember when we, when we met McGee in California, a couple of years ago. He didn't need our money.

[00:33:16] He didn't need our venture capital. He had all the money lined up. Uh, and I don't want to use the word bank, but we, we almost, you know, we had to convince him that, that we as Green Soil, because we understood the built form and we understood what goes into the construction of the built form, that we could add a value to it.

[00:33:38] Uh, as a venture capital that just straight money couldn't offer and, and we're grateful that, uh, McGee agreed with us. Uh, only gave us a little sliver because that's all, uh, he could give us, but You know, our team has been working very closely with them, and, um, here in Canada, we have a lot of carbon taxes, uh, starting, and, [00:34:00] uh, it's only gonna, uh, increase exponentially between now and 2030, so it's just good business, and to be able to safely say McGee's technology, WattCarbon's technology, verifies for us that it is really a true savings, I think goes a long way to creating credibility In the work that DR does, it's going to enable him and his peers in the industry to better convince those that are sitting on the sideline that now's the time to do it.

[00:34:36] James Dice: Awesome. Well, thank you to all three of you for coming on the show and explaining this complex concept. I think you all have done a great job of sort of simplifying. Um, decarbonization is a complex thing, and this is not a simple transaction that we've outlined here. Um, and you guys have sort of demystified it a little bit.

[00:34:54] So thank you.

[00:34:55] DR Richardson: One other reflection, James, just before we wrap up is I think [00:35:00] what's so great about what McGee and WattCarbon are doing is Alan's painted a very complex portrait of how big real assets are operated in the real world, right? Decarbonization can't be done with software alone. It requires software, innovative business models, and real assets.

[00:35:22] Real steel in the ground, actually decarbonize it, right? And that gets lost so many times in the decarbonization conversation where, you know, what about a software solution for this? What about a software solution for that? The real world's harder. This, this real infrastructure in the world is so hard to decarbonize and it requires coming together in these, uh, complex.

[00:35:45] New business models that McGee's unlocking to really, um, accelerate the decarbonization because the status quo is not going to cut it. So I've really appreciated the insights from, from everybody in this team, sharing, um, just a little bit about what it took. To get to the [00:36:00] point where they can understand how to make their side of it all really simple to accelerate to broader cause.

[00:36:06] James Dice: Great, great insights, DR. I think it's, it's, it really paints to the like, yes, you do have options here. You might not be able to, you know, do this two year payback retrofit. You might not be able to get software installed right away. You might, you know, all the excuses are there, but. You know, there are a bunch of different options here and, and what carbon can, can help with it when you run out of, run out of options.

[00:36:28] So, all right, thank you all for coming on the show. Appreciate it.

[00:36:36] Rosy Khalife: Okay, friends, thank you for listening to this episode as we continue to grow our global community of change makers. We need your help for the next couple of months. We're challenging our listeners to share a link to their favorite nexus episode on LinkedIn with a short post about why you listen. It would really, really help us out.

[00:36:54] Make sure to tag us in the post so we can see it. Have a good one.

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"We're on sort of a 300 year time frame right now for decarbonizing buildings, and we have about 30. Like honestly, right? So, so what we really need is, you know, more Alans and more DRs, tackling this problem so that we can reach those customers in the moment in which they're ready to make that replacement and make sure that they're opting for the lower carbon option.”

—McGee Young

Welcome to Nexus, a newsletter and podcast for smart people applying smart building technology—hosted by James Dice. If you’re new to Nexus, you might want to start here.

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Episode 157 is a conversation with McGee Young from WattCarbon, Alan Greenberg from GreenSoil Investments, and DR Richardson from Elephant Energy.

Summary

Episode 157 features McGee Young from WattCarbon, Alan Greenberg, and DR Richardson from Elephant Energy and is our 7th episode in the Case Study series looking at real-life, large-scale deployments of smart building technologies. These are not marketing fluff stories, these are lessons from leaders that others can put into use in their smart buildings programs. This conversation explores how WattCarbon can bridge the gap for property owners and vendors, while simultaneously validating their decarbonization efforts. Enjoy!

Mentions and Links

  1. WattCarbon (1:05)
  2. Elephant Energy (1:30)
  3. GreenSoil Investments (6:00)
  4. Nexus Podcast #120 (11:10)
  5. Solar Holler (17:52)
  6. Leap (17:55)
  7. Bloc Power (18:00)
  8. Quick Carbon (18:11)
  9. Recurve (18:58)
  10. Vision Ridge Partners (20:25)
  11. EVgo (20:42)

You can find McGee, Alan, and DR on LinkedIn.

Highlights

Overview (0:51)

Introduction to DR Richardson (1:40)

Where is the decarbonization effort at today (9:12)

Introduction to McGee Young (11:20)

What types of companies are on that side (17:28)

Calculation of carbon savings (18:32)

How does this help decarbonize homes faster (25:26)

Reflections on the conversation (28:25)

What would you say to others considering their options (30:35)




Music credits: There Is A Reality by Common Tiger—licensed under an Music Vine Limited Pro Standard License ID: S502007-15083.

Full transcript

Note: transcript was created using an imperfect machine learning tool and lightly edited by a human (so you can get the gist). Please forgive errors!

[00:00:00] McGee Young: We're on sort of a 300 year time frame right now for decarbonizing buildings. And we have about 30, like honestly, right? So, so what we really need is, you know, more Alans and more DRs. Uh, tackling this problem so that we can reach those customers in the moment in which they're ready to make that replacement and make sure that they're opting for the lower carbon option.

[00:00:26] James Dice: Hey friends, if you like the Nexus podcast, the best way to continue the learning is to join our community. There are three ways to do that. First, you can join the Nexus Pro Membership. It's our global community of smart building professionals. We have monthly events, paywall deep dive content, and a private chat room, and it's just 35 a month.

[00:00:43] Second, you can upgrade from the Pro Membership to our courses offering. It's headlined by our flagship course, the Smart Building Strategist. And we're building a catalog of courses taught by world leading experts on each topic under the Smart Buildings umbrella. Third and finally, our marketplace is how we [00:01:00] connect leading vendors with buyers looking for their solutions.

[00:01:03] The links are below in the show notes, and now let's go on to the podcast.

[00:01:10] All right, welcome to the Nexus podcast. This is the latest episode in our series, diving into case studies of real life deployments of smart building, and in this case, decarbonization technologies. Today we have a story coming from the WattCarbon Marketplace, and we've heard from McGee Young, co founder and CEO of WattCarbon in the past.

[00:01:29] He's now back with a few of his friends here. We have Alan Greenburg a seasoned investor, developer, and manager of real estate with a passion and sort of history of incorporating technology and sustainability into his developments. Alan's here to share the story of how his firm purchased carbon offsets on the WattCarbon Marketplace.

[00:01:46] We also have DR Richardson, co founder of Elephant Energy. DR is here to tell the story of where Alan's money goes once the offsets are purchased. So let's start with you, Alan. Can you, um, tell us a little bit of your background? [00:02:00]

[00:02:00] Alan Greenberg: Sure.

[00:02:00] Uh, good afternoon. Thanks for including me for today. Uh, my background is from a real estate family, got involved in our business, uh, in my early twenties.

[00:02:10] Later on, um, one of my responsibilities. In 1998, I took over management of our 15, 000 rental units based here in Ontario, between Toronto and Ottawa, and I quickly understood that there was a malaise in our company and across the industry in that we were consuming resources. And everybody just paid the utility bills.

[00:02:38] In fact, to get the 2 percent discount, because in those days it used to be 2. 10 net 30, we had 32 people that were authorized to sign a utility check so we could get the 2 percent discount if we paid it quickly. Well, when I took over responsibility, they told me it was a non controllable expects. And I came back the next day, we went through [00:03:00] the P& L again, consolidated P& L.

[00:03:02] And again, they told me that utilities were a non controllable expense. And I said, I don't agree. I don't accept that. We have to be able to control our utilities. So, over the course of, uh, the next 6 to 12 months, put together a team called the Minto Green Team. And, um, I developed a concept called a Comprehensive Natural Resource Management Plan.

[00:03:26] And it was simple. We had an addiction to consuming utilities and other natural resources. And we just bought them, we just spent, we did it. So, anytime you have an addiction, first you have to learn about your addiction before you can cure that addiction. So it was an awareness program. When were we consuming resources in our buildings?

[00:03:48] When were we consuming resources in our office? And I realized that we were wasting a lot. I didn't know how to solve the problem, but I knew we were [00:04:00] wasting a lot. And it really came down to a mathematical equation. What's the cost of consuming a natural resource? What's the cost of reducing that spend?

[00:04:12] What's the economic return? And I use two simple examples. Number one is we all have chargers for our electric toothbrushes. I brush my teeth every day. But I don't leave it plugged into the wall. I unplug it. And every three nights, every third night, I plug it in, I charge it overnight, and then I use it for three days and then I charge again.

[00:04:35] And the second little pet peeve I have is chargers for all of our phones. We leave them plugged into the wall. When my kids come over and they borrow our charging stations, I go around pulling them out of the wall when they leave, because we're wasting. So a lot of change can happen by changing natural behaviors, becoming aware of our addiction.

[00:04:57] But the other part of it is... We have to [00:05:00] change what goes on in a building. So, fresh air vents start at the roof of an apartment building, blows fresh air down. In those days, there was a little, uh, opening under the doors, and the fresh air would come from the roof to the floor, the typical floor, the, uh, corridor, push it underneath and push the smelly air outside.

[00:05:22] But it was either on or off. So I understood at 5 o'clock, when people started to come home and cook, why they needed 100 percent fresh air being pumped in. But at 3 o'clock in the morning, that machine is still going 100%, but nobody needs it. So we went and put in variable speed drives. We got our money back in three and a half years, on buildings that my grandchildren were going to own.

[00:05:47] So after I paid back, The capital investment, which by the way, 33 percent or 30%, not a bad return on an unlevered basis. But after three and a half years, [00:06:00] we weren't, we got all our money back. And then the savings were forever. So that's how I got into this called a comprehensive natural resource management plan.

[00:06:10] And the rest is, uh, the rest is history. I left our family business as an operator in 2011. I started, uh, co founded a venture capital firm called Green Soil Investments. We started, uh, in Israel in food and ag tech, cutting out waste in those industries. And in, uh, 2015, we launched one of the world's first PropTech funds.

[00:06:32] Nobody knew what PropTech was when we started. Uh, I didn't even understand what PropTech was. We knew that we're going to make operating and running buildings and anything to do with real estate more efficient. Um, we've raised about 140 million between our two first two funds, uh, in the PropTech world, about 20, 20 odd companies that we've invested in.

[00:06:54] We've had a few exits. It is venture capital. We've written off a few investments as well. [00:07:00] One of the advantages we have is that my skill set is not as a venture capital investor. My skill set is as a user of real estate. How can we make that real estate more efficient? Uh, and now in the second half of our second fund, we are totally committed to investing in technologies and services.

[00:07:23] That help decarbonize the built

[00:07:24] for

[00:07:25] James Dice: great intro. Thanks for that. It's, uh, you have such a unique perspective, you know, I I've made the energy efficiency, uh, push from the outside, but it seems like you've definitely made it from the inside. That's probably a lot easier to do, uh, when you speak the language and, you know, maybe are also in the family.

[00:07:45] Alan Greenberg: One of the cool things that happened is as we started over the years, doing more and more and more and more, and then. And this division that I set up for property management, for income producing assets, took over and it became a corporate [00:08:00] service where all of our new homes, all of our condos, all of our office buildings, all our new construction started to get this.

[00:08:07] We set up something called the Minto, uh, the Minto Green Team, but Green Champions. And almost 10 percent of our workforce responded with ideas. On how we could reduce consumption of natural resources. From little things like double sided photocopying, to packaging, just all these little things. And then we started to give out bonuses for the savings.

[00:08:37] And I know there was one person in particular, he got like a 75, 000 bonus in 2005 2006. Because he came up with this brilliant idea. Right? And like we had these green champions, people that cared about our environment and about reducing consumption. We were able to empower our frontline [00:09:00] staff. So the DNA of Minto, even today, and I haven't worked there in about 12 years, and I'm no longer an owner in the family business.

[00:09:07] But because it started at the top, we were able to create a DNA of our company. Culture of our company focused on reducing consumption of natural resources. Cool.

[00:09:21] James Dice: So let's talk about where this is at today. So the way I understand it is the, the building that your office or offices are housed in, you guys have set out to decarbonize that building and have purchased offsets, um, to do so.

[00:09:35] Can you talk about that? Um, effort.

[00:09:37] Alan Greenberg: We bought the building in, uh, 2021. Uh, and it was a pretty efficient building from a electrical, uh, consumption point of view and gas consumption. Uh, and we've continued to encourage, uh, the property manager to continue, uh, along the path. And we have actually tried some new technologies in this building.

[00:09:59] [00:10:00] Uh, as beta testing, uh, before we actually would invest in a company, tried them out in the office building. But, you know, we weren't getting a, the goal we had was, how do we get to net zero? And, we were pretty close, but we weren't there. And, we didn't really understand carbon credits, and offsets, and all that type of stuff.

[00:10:18] And then, Through GreenSoil, we got exposed to WattCarbon, to McGee, and, and, um, I remember meeting him in California and, uh, we got very excited about his company and we got excited because we could see the benefits that was going to bring to the whole industry. But as a user of real estate, this was a tool that would allow us in our own real estate.

[00:10:42] To get to net zero to bridge the gap between what we could do retrofitting a building economically and then the balance of it by buying offsets. So we're thrilled to be one of the first customers. Uh, of what carbon and we're lucky. Our [00:11:00] office building has maybe 1 percent vacancy. Um, and we do have some renewals coming up.

[00:11:07] So we thought it was important to get ahead of the game and start promoting yourself as a net zero building, uh, based on what we do and then adding in what carbons offsets.

[00:11:19] James Dice: All right. So let's bring in you, McGee now. Um, can you introduce yourself again for people that haven't heard your episode? We'll link to the first episode with you in the show notes.

[00:11:29] It kind of went through the history of a company, kind of what you guys are special at. And, uh, we told the story of your career and that kind of thing. Um, so quick introduction for those people that haven't heard that.

[00:11:41] McGee Young: Sure. Thanks, James. And, uh, thanks, Alan and DR. I had been working, uh, in the, in the space of measurement and verification.

[00:11:48] Building software for utilities to measure the impacts of their energy efficiency programs. And realize that this was sort of the big unlock for, um, for [00:12:00] decarbonization, right? We've got roughly 40 percent of emissions are traceable back to buildings. Um, and of those about 70 percent happen on the demand side.

[00:12:10] Uh, so we've, you know, we've invested heavily in fact, in, in renewables on this, on the supply side, we've got large solar and wind farms going in left and right. If you fly across the country nowadays, fly over Iowa, all you see is wind farms. Uh, but you go into buildings and you see a lot of legacy fossil fuel equipment.

[00:12:27] And, um, and like Alan, uh, most of us haven't chosen to have that equipment in our buildings. Um, it was, it was there when we got there, uh, when, when we bought the, the place. And oftentimes it's, it's running pretty well, uh, and, and so we don't necessarily want to tear it out in the moment. Um, but we do have this aspiration of, of trying to do our part to, uh, reduce, reduce emissions.

[00:12:54] And so, uh, we, we set up WattCarbon as a way to provide a pathway to climate action that ran [00:13:00] through, directly through the sector that's most responsible for the, the largest sector responsible for emissions and that's our buildings. So if you want to have an impact on climate change, there's no better place to start than in the built environment.

[00:13:14] Now, the reason why we're not really investing in buildings is kind of threefold. Number one is, we don't really have great data systems to measure and manage building emissions. We typically focus on energy bills, but our utilities do a pretty poor job of connecting the dots for us. Maybe because they don't want us to really understand that, or maybe just because they can't.

[00:13:36] Uh, but nonetheless, um, it's really hard for even, you know, sophisticated real estate owners like Alan to even know what his carbon footprint is, um, much less, you know, what to do about it. Um, so for us, you know, it started with building a platform that was capable of tracking the hourly carbon emissions for every single building in the United States on demand and in real time so that we actually had the data infrastructure we needed to [00:14:00] do something about this problem.

[00:14:02] Now, the second barrier is that our environmental commodity markets are mostly focused on carbon offsets from, or nature based solutions. So the idea is that we're going to be pumping this carbon out, but we, if we can just absorb enough of it, um, we'll be okay. And frankly, there's, we can't plant enough trees, uh, to solve this problem.

[00:14:22] And it's, It's kind of like if your bathtub was overflowing, sure, you want to put some towels on the floor to, to mop up the water, but first thing you want to do is turn off the tap. Uh, and so our goal was to kind of rebuild environmental commodity markets with a focus on turning off the tap. How do we eliminate carbon emissions from buildings in the first place?

[00:14:42] The third barrier is, um, Alan kind of, uh, referenced it, is that while there are cash flows associated with, Doing most energy projects. Decarbonization makes money. Energy efficiency makes money. Oftentimes, there are upfront costs, and to do a project of any [00:15:00] size requires capital. And, um, most of us, if we want to do something like this, are taking out a home equity line of credit, or putting it on our credit card, or we might have enough savings built up.

[00:15:13] And folks like DR are out there making the sell that, hey, we should be decarbonizing, but the, the financing costs oftentimes make it impossible to, to, to get these projects to pencil out. And so we really need to rebuild the capital stack for investing in buildings. Part of that is by, um, if we can reorganize our, our environmental commodity markets to make it actually valuable to decarbonize, to recognize the value of decarbonizing a building, um, then it can allow, you know, a company like Allen's.

[00:15:44] Uh, to offset its emissions by helping a company like DR's actually go out and do projects. And so, Alan's made an advanced market commitment, which means that he's said to DR, hey, Now, not to DR directly, [00:16:00] we aggregate these guys together, so he doesn't get to pick and choose exactly who he's getting, but thanks to DR for signing up.

[00:16:06] But he says, hey, if you can reduce carbon emissions, we'll make a commitment to buy, uh, you know, X number of tons of those emissions. But we're only going to pay for what you actually end up reducing. We're not just sort of out here funding on a whim and a prayer or something like that. Um, and so we go do

[00:16:32] decarbonization projects in buildings, uh, we'll quantify those emissions reductions and pay you per ton of carbon that you're able to reduce. And what that allows DR to do is to go to his customers and say, Hey, I've got a deal for you. If you do this, do this project with us, uh, we can take, uh, and, and, and it's up to DR to decide exactly how he wants to do this.

[00:16:56] So I'll let him speak to his, his plan specifically, but he knows [00:17:00] ahead of time that he'll get paid. For the emission reductions and so he can work that into his proposals to his customers. However, however, he it makes the most sense for him. His goal is to do more decarbonization and he knows that the more of these projects that he can do, uh, the more his company will grow.

[00:17:17] And so. So, that's our goal, is to unlock building decarbonization at scale by providing the data infrastructure required to know that it's really happening for real. To rebuild our commodity markets so that we can actually value decarbonization as a thing in and of itself. And number three, rebuild the capital stack so it's easier for companies like DR to go out and do the good work that they're doing.

[00:17:40] James Dice: Totally. And, and when you talk about the others besides DR, so what types of companies are on that supply side of the marketplace?

[00:17:47] McGee Young: Yeah, great question. Um, there's kind of two pathways to to decarbonizing buildings. One is through the grid and the other is directly through the building. So through the grid, we can put on solar panels, [00:18:00] we can enable demand response and and either batteries and load shifting.

[00:18:05] And so we've got some companies that focus on putting a company we work with called Solar Holler puts on solar panels and homes in West Virginia. We've got companies like Leap that are enabling demand response. On the building electrification side, uh, obviously Elephant Energy. BlocPower, um, is a great company that we work with out on the East Coast.

[00:18:26] Quick Carbon, um, is helping to decarbonize homes on the West Coast. So really, you know, any type of, of company that's out decarbonizing buildings, whether it's directly through electrification or indirectly through, uh, the grid, um, as it were, um, all of it is part and parcel of, of how we achieve these goals.

[00:18:47] James Dice: One last question for you, McGee. Before we bring Dr in the, can you talk about the calculation? So how does the technology work to actually quantify the amount of carbon savings?

[00:18:56] McGee Young: Yeah, so we, we require DR to submit [00:19:00] meter data from his, from his buildings and, uh, we use measurement and verification protocols that are open source, uh, that are derived from decades of, of, um, practitioners developing in, in the world.

[00:19:14] So this is the work that I did at my last company, Recurve, we built, um, open source software and, and methods so that you didn't just have to take my word for it, that this, you know, Alan, Alan, trust me, of course, but, you know, I don't want him to, to just, you know, we want this to be like a P& L, right, where you can actually look and see, like, what's actually happening.

[00:19:36] And traceable back to the actual buildings where this, where this, uh, where the decarbonization happens. So, in fact, not only are we measuring, uh, quite precisely using actual meter data, but we've set up an entire registry. So that every gram, every watt hour of electricity that is, that is saved, um, is recorded and given a serial number.

[00:19:58] So as Alan goes and makes [00:20:00] his claim for, hey, I've got a net zero building and some... You know, some customer or some irregulatory, you know, agency says, ah, we'll prove it. Well, he just dials into his WattCarbon platform and pulls up the actual certificates, uh, that are connected to the particular projects that got done.

[00:20:20] Um, so that all sides have confidence that the numbers are real.

[00:20:24] James Dice: Okay, DR, welcome, welcome to the show. Good to see you again. Um, can you give us a little of your background and talk about Elephant Energy and how, and what, sort of what you guys do?

[00:20:32] DR Richardson: Yeah, thanks everyone. Uh, really excited to be here. So, my background briefly is in private equity.

[00:20:40] I spent a decade helping build a firm called Vision Ridge Partners based in Boulder, Colorado. Where the firm has a couple billion under management, I'll focus on investing in sustainable real assets. So we invested in and owned, uh, direct solar projects, both in the US, Japan, Taiwan. We also [00:21:00] owned EVgo, the fast charge network for electric vehicles, for a number of years.

[00:21:03] Um, we owned some ag and water assets, foreign gas. The firm now has a fleet of Norwegian electric ferries. So I spent a decade helping build this platform to try to invest in real, uh, assets that were at the center and at the core of the energy transition, where there was not technology risk, but where the unit economics, the fundamental math of the asset just made a lot of sense where we could be deploying capital, be making a really good risk adjusted return, and be playing a fundamental, uh, role in the energy transition by.

[00:21:39] Um, de risking, uh, these assets and these platforms at scale. And I, I really enjoyed that work, did it for, for a decade, and, uh, accidentally got the startup bug by working closely with some of the entrepreneurs that we were investing in and supporting. And decided I wanted to go build a platform that took a lot of those same [00:22:00] principles, um, to the market and do it in a way that was going to have a lot of impact.

[00:22:05] So I started Elephant Energy, uh, with a good friend of mine who'd spent his career as a clean tech operator, um, building solar projects, building solar manufacturing plants, uh, deploying autonomous electric vehicles. Whole, whole range of different types of, um, uh, deploying those assets. And he and I, between our two backgrounds, have, uh, figured out what is an asset where you don't have to take a lot of risk on, where you understand the internet economics, where the technology is proven, how do you go scale that?

[00:22:35] Um, and so that's really the, the idea behind Ellicent is how do we make a really big impact by using the tools of capitalism? to accelerate the energy transition. We were trying a bunch of different business models, uh, working with consumers to try to make their homes more climate friendly. That's what we wanted to do.

[00:22:53] We had a bunch of ideas, and we tried a bunch and all those ideas failed. And then the, the thing that [00:23:00] um, our, our homeowners kept saying to us though was, what about heat pumps? Tell us about heat pumps. How do we install a heat pump? And so we decided to listen to that customer feedback. And I had a 17 year old centrally ducted gas furnace at my house in Colorado.

[00:23:16] And we said, how hard can it be? Uh, we'll, we'll, we'll deploy a heat pump. And it turns out it was really hard to deploy a heat pump. Every single part of the deploy heat pump was hard. Uh, what OEM, what technology were we going to use? How can we find a qualified vetted contractor? What rebates would we qualify for?

[00:23:37] Did the contractor also have an electrician? Would that be permitted? Uh, did the electrician come in the cost? And how do we know, in Colorado it gets really cold. How do we know that the equipment is going to work year round? So just every single thing, you know, two of us are former clean tech operators and builders, and we were really struggling [00:24:00] to deploy one heat pump.

[00:24:01] And we said, if two of us were effectively unemployed trying to build a business, we can't figure out how to deploy this heat pump. You know, your average homeowner is, is no, uh, is completely, um, out of luck. It's, it's going to be impossible. They've got jobs. They've got kids, you know, it's going to be challenging.

[00:24:17] So that, that was our aha moment of the world needs a platform that can make creating your home to be more climate friendly, uh, in a way that is simple, that lets you do it confidently, that, you know, you're going to be warm. In the winter with, and it's going to be installed at a high quality and that is simple, right?

[00:24:38] One simple transaction, um, you're a frictionless purchase experience where everything's taken care of. You've maximized all the financial rebates incentives available to you. Um, and that it's a good fair price. If you bring price simplicity and confidence all together, you can unlock an interesting business opportunity.

[00:24:57] That was our initial insight, um, since then at [00:25:00] Elephant Energy, um, over the past year and 10 months, we have upgraded about 300 homes in, uh, Colorado, and we recently launched our Massachusetts market as well, um, where we install heat pumps, heat pump water heaters, we do EV chargers, we do insulation, weatherization upgrades, And again, with that sort of very simple formula of how do we make this the most affordable, simple, and confident purchase and upgrade a homeowner can do to make their home more climate friendly.

[00:25:32] James Dice: Um, I have been one of those people that has tried to install a heat pump and I second you, it's not easy. Um, so can you talk about in context with this marketplace conversation, how is it helping homeowners? To get this money coming from the demand side or the buyer side, like Allen is providing into that pool of buyer money.

[00:25:54] How does that help you? You decarbonize these homes faster?

[00:25:57] DR Richardson: Yeah. So let's talk about [00:26:00] price. So a heat palm immediately from a decarbonization perspective provides about a 25 to 30 percent carbon reduction for an average home here in Colorado, even though we have a bunch of coal on the grid. Uh, it's so much more efficient.

[00:26:15] That's replacing a gas appliance with an electric one reduces the carbon intensity of that hour. So there's a very obvious decarbonization story to be told here, especially as the grid gets greener. But that comes at the expensive price. Heat pump installs right now without any rebates or financial incentives are more expensive Then replacing a gas furnace plus AC.

[00:26:39] Do exist right now in number of rebates and financial incentives. And in all the markets that we operate in, that actually brings the cost of a heat pump down below the cost of a gas furnace plus AC, if you're going to be replacing both things. So there's a positive economic story for most homeowners when they need to retire their [00:27:00] gas furnace and their AC.

[00:27:01] They can do so at a lower cost, both upfront and operating with a heat power. Um, that being said, it's still more expensive than if you're going to do furnace alone or an AC alone. And so what we're doing as a business is we're trying to be very focused on that North star of how do you create the simplest frictionless install for homeowners?

[00:27:23] We have to decarbonize, we have to defossil fuel, uh, 60 plus million homes in the U S and we have to do that as fast as possible. The only way that happens is if it's a brain dead economic decision every single time. And so we see platforms like WattCarbons, um, and the purchases that Allen is making as a really critical component to be continuing to drive the cost down, um, for people to take advantage of the fact that they are decarbonizing.

[00:27:52] They are upgrading their homes to be more climate friendly. And every, every little piece that we can assemble along the way to make that, [00:28:00] uh, drive that price farther down to make it simpler and easier for homeowners to decarbonize, the better, uh, the business we're going to build and the faster we're going to decarbonize and accelerate electrification.

[00:28:11] James Dice: Awesome. Makes a ton of sense. Um, Let's just talk between the four of us now. Um, basically the summary is if people are sort of thick in the skull or they're doing something else while they're listening to this. Buyers like Alan are throwing money into the pool. McGee is sitting in the middle of this, right?

[00:28:30] Making sure that the savings happen. Calculating the carbon. Assembling the supply side. DR and Elephant Energy are one of the suppliers on the marketplace that is actually doing the decarbonization. Um, Do you guys have any reflections upon this conversation and now that we've sort of gone through the whole life cycle of the transaction?

[00:28:48] McGee Young: I'm just thrilled to sort of sit here and listen to the two of them together, you know, talking about this is, you know, Alan wants to make a difference in the world, right? Has been committed to this for decades. [00:29:00] Uh, DR has been figuring out how to make a difference in the world. Uh, but Alan could never help, go help people install heat pumps in their homes in, in Colorado.

[00:29:09] And, uh, and DR doesn't have, you know, isn't sitting on, uh, on a bunch of commercial real estate, uh, either. And, and, and so, but the Earth doesn't care. Right, the climate doesn't care where these emission reductions come from. Uh, so if Allen can, can help accelerate the decarbonization of buildings in Colorado, and maybe somebody in Colorado can help accelerate the decarbonization of buildings in Toronto, if we can pick off the ones that are in the moment ready for a replacement, that's going to be the difference maker.

[00:29:43] We, we replaced 20, 000, 20, 000 fossil fuel heaters. And water heaters every single day in the United States with another fossil fuel heater or water heater. 20, 000 a day. Every single day [00:30:00] that will trap that are going to lock in emissions for the next, you know, 30 years each, right? That's that's billions of tons of co2 that we're just guaranteeing The thing is is we've got it we've got and we're on we're on sort of a 300 year time frame right now for decarbonizing Buildings and we have about 30 like honestly, right?

[00:30:19] So so what we really need is, you know more Allens and more DR's Tackling this problem so that we can reach those customers in the moment in which they're ready to make that replacement and make sure that they're opting for the lower carbon option.

[00:30:35] James Dice: Alan, what would you say to the folks out there that are looking at their offset options?

[00:30:39] You know, they've gone through this decarbonization roadmap in their buildings and they're saying, okay, we need to, we need to offset something here to get to net zero. Like you said, what would you say to them in terms of this being an option for them?

[00:30:52] Alan Greenberg: What I was You know, marketing sustainable condos, you know, in 2008, 9, 10, we [00:31:00] called it greenwashing.

[00:31:02] There were a lot of people making claims that were bullshit, and we knew we were doing the real thing. And from what I've been, some of the readings over the last few years is that a lot of multinationals were buying offsets, probably more plant based offsets. Without truly understanding the life cycle benefit or lack of benefit as in the later years, you, you invest in a tree farm and then you cut down the trees after 18 years, uh, or whatever the growth is.

[00:31:34] So what I really like about focusing on the built form, I think is great, uh, and, and the verification tools that McGee has come up with, so that with confidence. When I buy that offset and if I ever get on it, it's there. I think back on, on the millions of dollars [00:32:00] that we spent in our buildings and the reduction in consumption that we've done over the last 20 years, 25 years.

[00:32:09] We know it, but it's never really been verified. I wish WattCarbon was here 20 years ago, right? And, and so we could verify what we did in our portfolio, get what financially helped us with the returns we were getting because we just, all the equipment and buildings and all that type of stuff. I'm not sure.

[00:32:32] I mean, it would have helped the financial returns back then, if things were a lot, utilities were a lot less expensive, paybacks were quicker, but I, I really wish we had WattCarbon from day one. I wish in 1998, when I said, no way we can control utilities, I wish we had a WattCarbon shoulder to shoulder with us, uh, that would have helped us.

[00:32:54] Verify it all and make the economics better for us and I could have as much [00:33:00] of a green champion that I personally have been, you know, we, I think we could have created a lot more green champions had what carbon existed. So, um, I remember when we, when we met McGee in California, a couple of years ago. He didn't need our money.

[00:33:16] He didn't need our venture capital. He had all the money lined up. Uh, and I don't want to use the word bank, but we, we almost, you know, we had to convince him that, that we as Green Soil, because we understood the built form and we understood what goes into the construction of the built form, that we could add a value to it.

[00:33:38] Uh, as a venture capital that just straight money couldn't offer and, and we're grateful that, uh, McGee agreed with us. Uh, only gave us a little sliver because that's all, uh, he could give us, but You know, our team has been working very closely with them, and, um, here in Canada, we have a lot of carbon taxes, uh, starting, and, [00:34:00] uh, it's only gonna, uh, increase exponentially between now and 2030, so it's just good business, and to be able to safely say McGee's technology, WattCarbon's technology, verifies for us that it is really a true savings, I think goes a long way to creating credibility In the work that DR does, it's going to enable him and his peers in the industry to better convince those that are sitting on the sideline that now's the time to do it.

[00:34:36] James Dice: Awesome. Well, thank you to all three of you for coming on the show and explaining this complex concept. I think you all have done a great job of sort of simplifying. Um, decarbonization is a complex thing, and this is not a simple transaction that we've outlined here. Um, and you guys have sort of demystified it a little bit.

[00:34:54] So thank you.

[00:34:55] DR Richardson: One other reflection, James, just before we wrap up is I think [00:35:00] what's so great about what McGee and WattCarbon are doing is Alan's painted a very complex portrait of how big real assets are operated in the real world, right? Decarbonization can't be done with software alone. It requires software, innovative business models, and real assets.

[00:35:22] Real steel in the ground, actually decarbonize it, right? And that gets lost so many times in the decarbonization conversation where, you know, what about a software solution for this? What about a software solution for that? The real world's harder. This, this real infrastructure in the world is so hard to decarbonize and it requires coming together in these, uh, complex.

[00:35:45] New business models that McGee's unlocking to really, um, accelerate the decarbonization because the status quo is not going to cut it. So I've really appreciated the insights from, from everybody in this team, sharing, um, just a little bit about what it took. To get to the [00:36:00] point where they can understand how to make their side of it all really simple to accelerate to broader cause.

[00:36:06] James Dice: Great, great insights, DR. I think it's, it's, it really paints to the like, yes, you do have options here. You might not be able to, you know, do this two year payback retrofit. You might not be able to get software installed right away. You might, you know, all the excuses are there, but. You know, there are a bunch of different options here and, and what carbon can, can help with it when you run out of, run out of options.

[00:36:28] So, all right, thank you all for coming on the show. Appreciate it.

[00:36:36] Rosy Khalife: Okay, friends, thank you for listening to this episode as we continue to grow our global community of change makers. We need your help for the next couple of months. We're challenging our listeners to share a link to their favorite nexus episode on LinkedIn with a short post about why you listen. It would really, really help us out.

[00:36:54] Make sure to tag us in the post so we can see it. Have a good one.

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