We have this model which hopefully will see that fund become something of an evergreen initiative or something at least that spends down over time depending on what happens to pricing in the market.

It means that philanthropy is not just us purchasing some carbon credits, but it's us showing up early, taking on some risk and building a platform for the market to grow and really sort of spin the flywheel, as it were.

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Welcome to the Carbon Stations podcast, where we speak to some of the leading figures in the emerging carbon industry.

Our guest today is Adam Fraser, CEO of nonprofit philanthropic organization TerraSet, which is focused on channeling climate finance to catalyze the carbon removal industry.

Adam, thank you so much for joining us.

It's great to have you on the show.

To start us off, could you please share a little bit about your background and the path that ultimately brought you into the climate space?

Yeah, absolutely.

I was at the Carbon Removal Alliance member retreat here in Brooklyn yesterday, which we should talk about more broadly than this.

But they gave me a T -shirt saying, I worked in carbon removal before it was cool, which was a great T -shirt.

I'm a big, big fan of it.

I feel like a bit of a fraud because, you know, I still think of myself as very new to this space, something over two years into my time with Terraset, which is my whole time in carbon removal.

And there are people who've been grinding at this work for longer.

But I remember when I was offered this role, talking to a friend in the field who said, well, no, that's what we need.

We need thousands and thousands of people with expertise in other areas coming to work in carbon removal.

That's what I did.

I had spent 18 years working in the world of sport.

So when I left college and I studied classics, which is about the least vocational thing you can study, the only thing I wanted to do was be a journalist.

And that's the job I got.

I actually have always been a huge sports fan.

I got a job as a sports journalist.

I moved from that to writing about the business behind sport because I got very curious in how those different parts of thinking together.

You know, writing about the business behind it, I got sucked into working in the business behind it, working on the commercial side of sport and with events and with athletes and sponsorships and everything there.

And I then became increasingly fascinated by conversations and partnerships with some of the world's leading athletes and brands about how sport could change people's lives and be a force for social impact.

So I started doing more and more in that space.

lucky enough to spend a decade at an incredible organization, the Laurier Sport for Good Foundation, which was founded under the patronage of Nelson Mandela after the role he saw sport play in rebuilding post -apartheid South Africa.

It's a grant -making organization that supports more than 300 grantees in 50 communities around the world, gives out tens of millions of dollars in funding and capacity building.

And I led the fundraising there, and then I became the global chief executive and was in that role for a few years.

Maybe when I say all of that, it sounds like quite a logical pathway, like each thing followed the next quite naturally.

But, you know, if you'd asked me 20 years ago how I would go from being a sports journalist to CEO of a climate nonprofit, you know, it's...

It's been a pleasant surprise each step of the way.

It's certainly a very, very interesting story.

And definitely probably the first time, actually, that I've had a fellow journalist on the podcast.

So that's great.

And yeah, I can also relate to what you said about feeling kind of like a fraud a little bit because I've only been in this space for a while.

three, four years now, maybe.

And I also feel like I'm learning something new every day.

But yeah, as you said, it's important to have more and more people involved in this industry.

But moving on to Terraset specifically, what was it about the organization that really spoke to you?

I mean, I just said about my...

work at Laureus.

And that is an incredible organization.

In many ways, it was a dream job.

You know, I was working with some of the world's biggest athletes, some amazing brands, some amazing people to have a social impact.

We were working across education and employability and gender equity, a whole range of different issues.

We didn't do that much climate work.

We did some grants to organizations who were doing environmental work.

We did some toolkits for organizations looking at their own footprints, their own impact.

But we didn't do that much climate stuff.

And a few years ago, I just found myself increasingly feeling like I was standing on the sidelines of the biggest issue facing the world and not diving in.

So I started to think, well, what could I do?

How could I help?

Are there places where I could volunteer?

Are there places where I could...

And I actually found it quite hard to find those.

I think at times any sector can be a bit insular.

That's probably the wrong word, but hard to break into, let's say.

And I wasn't finding the right things.

And then, funnily enough, I met the team behind Terraset, the founding team, which was just launching at that point and had secured some initial commitments from the Grantham Foundation and from Conscience Bay Research that was enabling them to start to build out a team.

So instead of volunteering or finding another way to be involved, I got really lucky because what they needed was someone with experience in building and scaling a nonprofit to come in and build and scale this one.

And I became employee number one at Terraset.

It gave me a way to take what I knew in terms of raising money, creating a platform, having an impact, and apply it to a field where I really wanted to have an impact.

carbon removal and tackling the climate crisis.

And it's been an amazing journey.

I think that I remember in those conversations saying the thing that attracts me about this is it's a big challenge and I want to work on big challenges.

It's the chance to work with great people because I could tell that those involved with Terraset were great people and I maintain it to this day and we have more great people.

And it's a...

It's a mission that I really care about.

So it's all of those things really remain true.

And I'm really excited by what we've built in the last couple of years, but especially where I think we'll go from here because there's so far still to go in this sector.

TerraSet has a very unusual approach to finance.

For those of our listeners who perhaps are not familiar with your work, could you tell us a little bit more detail what exactly that entails and how exactly you guys channel funds to carbon removal projects?

Yeah.

Absolutely.

We're a 501c3.

We're a nonprofit.

So we raise funding, tax -deductible donations from individuals, foundations, family offices, donor -advised funds, all the sources of capital that you might expect.

We raise that and we use it to make strategic pre -purchases of high -quality carbon removal.

Pre -purchase is because we feel like that's how we can have most impact on the field.

That's what helps companies build, validate, and scale.

It's a form of deploying capital versus, you know, let's say the grant making that people might traditionally think of a nonprofit as doing, and which is really important in this field as well in all sorts of ways.

It lets us deploy that capital as...

Revenue on people's balance sheets, which helps them build and scale.

It lets us directly focus on paying for the removal of CO2 from the atmosphere, which is what our donors care about.

And it lets us be a market signal and be part of moving this forward.

It's really interesting, something that's come up more and more this summer as we launched our revolving fund, which is another kind of new...

way of working, which we should get into.

But a lot of the suppliers we're talking with started to quantify the difference in value to them of a pre -purchase to an offtake agreement.

And the numbers that kept coming around were about 25 % to 30 % more value in a pre -purchase dollar for dollar than an offtake.

Now, obviously, an offtake can be significantly larger, and those large agreements are absolutely key.

But with an offtake agreement, there's a great deal that goes into financing it in terms of delivering it, in terms of when the money actually lands, which could be multiple years down the road, even if everything goes well.

So we try to raise money now and move it now because we think that that is a way we can have most impact on scaling the field.

Now, when you think about donors, climate philanthropy can take many forms, like from adaptation to conservation.

What do you think motivates people to give to carbon removal specifically?

In terms of our donors, I think there are a couple of different things that appeal to them.

And obviously, it can be more of these.

You know, there are those who really care about just removing carbon.

They want their dollars to go to taking CO2 out of the atmosphere.

That's the unique appeal of carbon removal.

And we provide a philanthropic way for them to do that because they don't actually need carbon credits for anything.

They aren't focused on carbon accounting.

They're not corporates looking at that.

their business needs.

They are just people who care about scaling this work, who care about taking carbon out of the atmosphere.

And that might be because they're thinking about their own footprint and they want to remove tons of carbon in some way tied to offsetting their own footprint.

Or it might just be because they really care about this.

They have a contribution mindset to the work.

So that's the first group.

The second group, and again, there's obviously overlap, is those who really care about building the market.

Some of our donors who come from investing backgrounds, entrepreneurial backgrounds, VC backgrounds, they are interested in building markets and seeing things scale.

And each donation helps prove demand and unlock scale and bring new buyers and investors and policymakers into the market.

The third I'd probably say is those who see carbon removal as a way of restoring ecosystems, strengthening communities, and the co -benefits of this work, which need to be quantified way better, but are extensive in terms of creating jobs, in terms of preventing wildfires, in terms of water quality, in terms of deacidifying rivers and the ocean.

There are so many ways that this work...

has an impact beyond just the tons of CO2 that come out of the atmosphere.

And across those different reasons, those different groups, is why we think philanthropy is such a natural fit.

It removes carbon today, it builds the market for tomorrow, and it delivers other benefits to people and places and the environment along the way.

Speaking of those benefits, Adam, it's been a long -time curiosity of mine as to how anyone really goes about vetting carbon projects.

From the outside, it seems like an impossible task with so many factors to consider.

Could you please walk us through your approach to vetting projects and deciding where philanthropic dollars will have the biggest impact?

That's a really interesting question right now because it's something we were having a conversation about just the other day.

Our criteria are criteria that you will recognize from other conversations.

We're looking to identify projects where the carbon removal is additional, verifiable.

long -term slash permanent, depending on people's preferred wording there, ethical, scalable, validated.

And a couple of years ago, 18 months ago maybe, we added catalytic as one of those as well.

We felt like that was something that was across our work, but really should be recognized as its own separate criteria.

We wanted our impact on this work, on a particular project supplier to be catalytic.

We were talking the other day about how In a way, everything that I just said should only be the base layer.

That's just the kind of the table stakes and catalytic as well with philanthropic capital.

We should really be thinking about how we scale things.

I mean, the mechanics of that process, we have a carbon council, an advisory board of people from different backgrounds within and outside carbon removal, and they help advise on the strategic makeup of our portfolio.

So just as an example.

A year ago, they might have been saying, in fact, they were saying, oh, wow, we're heavy on direct air capture.

We need to diversify that.

That might be around methodology.

It might be around region.

It might be around size of company.

But they're providing that strategic input.

At the same time, we have an open intake form on our website.

So until now, we haven't funded in cohorts.

People are able to apply to us for funding any time.

Those initial applications are assessed against a rubric of the criteria that I touched on before.

And then when the stars align and we have funding available and we have donors' interests in particular areas and we have the strategic input that I mentioned from our carbon council and we have...

the ability to go and make a series of purchases.

We then do deeper due diligence.

We have some independent assessors who get into really looking under the hood a little bit of some of the projects.

that we can then move forward to make a purchase.

And we're a 501c3, so ultimately what we do is make a recommendation to our board, our governing board, that this is what we think is the best use of this philanthropic capital to have an impact.

I want to shout out as well, something I think is really great about this field is the transparency and the sharing that so many organizations have.

People like Frontier who...

make a lot of their materials and their decisions public and other organizations doing that work.

All of it is ongoing validation and verification of the quality of work that's out there.

Because, you know, as we know, historically in the carbon markets, we've seen problems.

And we really believe that carbon removal is the chance to drive quality in this space as well.

So that's something we always strive for.

On that note, actually, I wanted to also ask you about the recently supported by TerraSight, the newly supported cohort of companies, including major players like Undo and DeepSky in Canada.

What excites you most about this group?

And what do you hope that success signals for the broader carbon removal industry?

What excites me is also what kind of...

What worries me, what terrifies me, right?

I think that this new round of partners reflects how fast this ecosystem is maturing.

Like we have added really great partners to what I considered already a really strong portfolio of incredible companies.

And yet we still have a couple of hundred organizations who've come to us for funding.

We just don't have that funding available.

We're capital constrained.

We sadly cannot fund every carbon removal project out there.

But I'm really excited by the diversification of methodologies, the diversification of geographies, the different leaders in this field who we've brought in.

It's the first time, or this year is the first time that we've also done some methane abatement.

It's the first time that we've done some refrigerant destruction.

So we've branched out slightly let's say the pure engineered CDR, even though that remains absolutely core for us.

But the methodologies that we've brought into the portfolio for the first time are really exciting.

And the world needs all of these things to come to scale.

It's a chance as well to grow that portfolio on a global basis, as I say, so we now have.

Projects in Kenya, projects in Indonesia, projects in Canada, projects obviously here in the USA.

And this is a global problem.

Emissions are a global problem.

The atmosphere is a global thing.

It's something we believe can be tackled from all around the world.

And we see incredible innovation coming from all around the world and different market approaches from different governments, different nations that hopefully come together to drive this work forward.

So it's exciting to be part of that.

And circling back to what you mentioned earlier, this very interesting mechanism that you've rolled out called the Revolving Fund.

For those who aren't familiar, and for myself actually as well, because I'm not quite, let's say, I don't know all about it.

So could you please explain what it is and how it works in practice?

Yeah, I should probably go back a step again.

So Terraset at its founding and then on most of our work until now has had a very, very simple model.

People donate to us.

They get a tax receipt.

They're donating to a nonprofit.

We take that money.

We pre -purchase carbon removal from these early stage companies that will be delivered at some time in the years to come.

Some has been delivered now.

Some is mapped out over the next five or six years, you know, as you would expect of anyone pre -purchasing in this field.

What we found in a survey of suppliers we did at the end of last year, in conversations with donors, in conversations with some corporates, was that there was more we could do with this model.

You know, suppliers were talking to us about the importance of early stage capital and the fact it was getting more difficult to secure.

Corporates were saying to us, we wish we could do more in this space, but we can't gamble in quite the same way because we need the certainty of this.

And then donors were saying to us, well, I love that I give you money and it has an impact, but, you know, how could it go further?

Donors are always asking nonprofits, like, how could you do more?

And we were talking to the Schmidt Family Foundation, who are incredible thinkers in all aspects of tackling the climate crisis.

But we were talking to them about this work, and together we essentially brought forward this idea of a revolving fund, where we take our experience over the last few years, our expertise in...

selecting these projects and the model of pre -purchasing and use philanthropic capital, sort of seed funded by the Schmidt Family Foundation, but we hope to bring many other donors into this fund.

And we use that to pre -purchase carbon removal just as we do now.

But then when the tons are delivered, instead of those tons being retired, we want to resell those to corporate buyers and then take that revenue.

and throw it back into the fund for the next round of pre -purchases.

So we constantly have a cycle of funding going to pre -purchases where we believe it's most catalytic.

Donors get to see their funding go further.

It doesn't just purchase one ton or 1 ,000 tons or however many tons of carbon removal.

It purchases multiples of that.

And corporates get to actually then...

buy delivered credits so they have the certainty, but they know their money goes into future purchases, future pre -purchases.

where it's more catalytic.

And that means we don't just start from zero every time, which is always the challenge in the nonprofit space.

So you raise some money, you spend some money, and then you think, now we have to raise more and find a way to take more carbon out of the atmosphere.

We have this model, which hopefully we'll see that fund become something of an evergreen initiative or something at least that spends down over time, depending on what happens to pricing in the market.

It means that philanthropy is not just us purchasing some carbon credits, but it's us showing up early, taking on some risk and building a platform for the market to grow and really sort of spin the flywheel, as it were.

Genius, actually, and wonderful mechanism.

I really love it.

Thank you for clarifying.

Stepping back to kind of the bigger picture, though, how do you see philanthropy fitting alongside government incentives and corporate carbon markets in building a strong carbon removal ecosystem?

Yeah, great question.

I was on a call a couple of days ago and well, let me take one step back from that.

People say to us all the time, oh, but can you really solve this problem just with charitable giving?

And of course you can't.

Like we don't think that philanthropy is going to be the answer to trillions of dollars moving towards this work, but we think it can be catalytic.

Someone said to me on a call a couple of days ago.

We've done ourselves a disservice sometimes in the nonprofit field because people just think, oh, charity, it's a nice thing to do.

And maybe that is charity, but philanthropy is catalytic.

Philanthropy is a bridge.

Philanthropy is a way of moving things forward and changing systems and actually having an impact.

And we see it as complementary to the other parts of the capital stack and the other parts of policy that you mentioned.

It's something that can...

signal early demand.

It's something that gives people a way to be involved.

It's something that can move fast.

It's something that can take different risks.

And all of those things then hopefully unlock follow -on funding from private markets that see offtakes follow our pre -purchases, that see policy over time come to really drive this work forward.

And it unlocks proof points and provides kind of market signals that really help those other sectors to dive into what is still a very new space.

Again, I said I was at the Carbon Removal Alliance retreat, and it's funny hearing some of the people like Gianna and Noah there who've been involved in this work for the last 10 years, and they were saying, you know, we used to get laughed out of the room talking about carbon removal, and now we're in this room with dozens of companies who are actually delivering this work, but it's still new.

giving people a way to be involved is still key.

One statistic that stuck with me was that 67%, I think, 67 % of people don't know what carbon removal is, if you ask them.

They've never heard of it.

But once people do know, 70 % of people are supportive of it.

And I think that is another way that philanthropy and what we do lets people dip a toe in this work.

They don't need to think, well, how do I start to even build a team of scientists or start to analyze one methodology over another?

They can think, okay, I can make a donation here.

I can see what that feels like.

I can know that I'm supporting some carbon removal.

I can learn more about the field.

And that's something that I think philanthropy brings to the table.

Yeah, in my experience, I'd argue that it's even less than that amount of people that actually know what carbon removal is.

My personal circle of friends and family actually have no idea what I do.

Yeah, if I walked down to the street, I would have told you, you know, nine out of 10, certainly.

This was based on some policy studies and surveys and things like that, that some of the people involved on the policy side were doing.

But I think it's, you know, it's indicative of...

The fact that this is, the problem here is people not knowing about this space or understanding it.

It's not that most of the naysaying comes from a lack of knowledge or even awareness that the field exists.

Yeah.

So looking forward, do you believe there will always be a need of philanthropic support?

Like, I mean, there certainly is now.

I mean, that's obvious.

But the end game ideally is to make carbon removal self -sufficient.

Do you see that ever happening realistically, like within a meaningful timeframe?

I mean, it would be wonderful if philanthropy was not needed in this field, right?

It would be incredible if we solved the problem and we build a robust market.

Funding coming in from all sorts of different sources and we can pack up TerraSet and go and do something else because carbon removal has reached where it needs to be.

I suspect there would always be other challenges, right?

We talked briefly about refrigerant destruction and methane abatement.

And I look at nature -based solutions and I look at nitrous oxide and I look at all the other areas where we need to make progress alongside pure carbon removal.

And I think philanthropy has.

a role to play and is playing a role in all of those things.

So like there will always be something.

But I think the mindset of can we put ourselves out of business by making this sector self -sufficient, as you put it, is an incredible ambition.

That's exactly how we should be thinking about it.

So while we're still on that note, what have been the biggest challenges so far in scaling philanthropic support for carbon removal?

What lessons would you say you've taken from these experiences?

I said a second ago the statistics and maybe the situation is worse than the statistics that I mentioned.

I think that's the first thing.

People just don't know.

And climate philanthropy is still 2 % of a $900 billion sector.

The philanthropic market is $900 billion a year.

Climate philanthropy is less than 2 % of that and only...

Less than 0 .1 % of it is greenhouse gas removal.

So we are talking about having a tiny, tiny slice of what's actually a fairly significant market.

We're very excited in the carbon removal field by the incredible work that people like Frontier are doing, bringing a billion dollars plus to this market.

People donate a billion dollars a day.

to philanthropy in the USA.

That is across a whole range of areas, right?

That's education, that's churches, it's the arts, it's all sorts of things.

But such a tiny percentage of that goes to anything to do with climate.

I think there are a whole range of reasons for that.

You know, it's a big problem when people don't know where to start or people think this should be someone else's responsibility.

Fossil fuel companies should be cleaning this up.

Government should be doing something.

You know, all those things that people think, well, why am I putting my money to this?

But actually, you could extend that argument to any space to which people are donating.

And again, I come back to that point that you can do it because philanthropy can be catalytic.

So the challenge is visibility.

The challenge is awareness.

Our job is to really help to change that, to try and make it really...

simple and credible and catalytic for donors to see that they can play a role in this market.

They can have an impact.

They can help move it forward.

I think once we talk to people about this work, it's very rare that someone says to us, people are maybe just being nice, but it's very rare someone says to us, no, I don't think this is a good idea.

But a huge majority of the time when we talk to people about this work, they say, wow, I didn't know that there was a way I could do this from a nonprofit perspective.

And so our job is to make sure that more people know that and we can unlock more money for this field.

I'm glad that we could be playing a small part in that, at least, by getting your story out.

That's why we're hugely grateful for the chance to do things like this.

Yeah, thank you.

Thank you.

Thank you for coming on the show and for talking about all this.

Unfortunately, we only have time for one final question for you.

And that is, what's next for Terraset?

What exciting new developments do you guys have lined up for the future that you can let us in on right now?

I mean, let's say that the next thing is scale.

I think what we've done over the last couple of years is really established that...

This is a way to have an impact in the market.

We have built this portfolio of 20 plus companies.

We've done what we said we would do, right?

We've moved this from being a concept that maybe philanthropic capital could play a role to actually doing that and moving millions of dollars.

Now we need to scale that and we need to be moving tens of millions of dollars and finding more ways for it to be impactful, whether that's...

different funding mechanisms or the ones we already have, whether it's scaling the revolving fund to tens of millions of dollars and, you know, really building a movement that kind of normalizes the role of philanthropic capital and scaling carbon removal and makes more and more people aware of it.

We're really excited.

by what we're seeing on the ground in terms of suppliers.

And I would say we're also really excited by conversations we're having with new donors who've never come near carbon removal before, but who I think are going to do things with us.

We are really excited that I think soon we will actually announce the first buyer of credits from the revolving fund, which starts to again prove that model.

And, you know, the timing of our conversation now, we're really excited by going into...

Climate Week New York with, let's say, a renewed sense of optimism and excitement in the space.

I think over the last year, a lot of people have been waiting to see how the foot lands on different things.

And people have been talking about the difficulties of securing funding, the costs of capital and all those things.

I look at our portfolio over the last couple of weeks and I see Terraton closing rounds of investment and Planetary getting a new offtake agreement with Frontier and just more and more progress across this field that we're excited to be part of.

Excellent.

I'm really excited to be keeping up with your progress.

And yeah, it's been a real pleasure to speak to you today and learn about all this much needed work that Terracet does for the world.

Adam, thank you so much for being here.

It was great to speak to you.

Likewise.

Thank you so much.

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