The SiteVisit

Carbon Revolution: Transforming the Building Materials Industry with Markus Kritzler, Chief Revenue Officer at Carbon Upcycling Technologies

• James Faulkner • Season 6 • Episode 176

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The cement industry is at a crossroads. As global construction demands soar, so do the sector’s carbon emissions—contributing nearly 8% of global CO₂ output. But Markus Kritzler, Chief Revenue Officer at Carbon Upcycling Technologies, believes there’s a way to build a better future—literally.

Markus has found purpose in a game-changing innovation: a technology that transforms industrial waste into high-performance construction materials. Carbon Upcycling’s process reinvents how we think about byproducts like electric arc furnace slag, fly ash, and clay—infusing them with captured CO₂ to create powerful supplementary cementitious materials. The kicker? These materials can replace up to 40% of traditional cement—without compromising strength or performance.

What truly sets this solution apart isn’t just its environmental impact—it’s the business case. While many green alternatives come with a hefty price tag, Carbon Upcycling’s materials remain cost-competitive, making sustainability a smart financial choice too.

In this episode, Markus breaks down the cement manufacturing process, highlighting why it’s so emissions-heavy—and how Carbon Upcycling is flipping the script on carbon in construction. Want to learn how your next project can help combat climate change? Hit play now.

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Speaker 1:

Marcus, you are calling in today from San Antonio, Texas. What's it like down in Texas right now?

Speaker 2:

Oh, it's fairly warm, not as sunny as I would have liked to, but it's warm, kind of nice, easygoing. It's an interesting town because there's not a lot going on in San Antonio, but there are still four or five big cement plants around it.

Speaker 1:

Oh yeah.

Speaker 2:

So it's a huge construction market. Yeah, it's just an interesting place to be.

Speaker 1:

That's cool. Are cyber trucks safe down there? Are they getting spray painted?

Speaker 2:

They're pretty safe. I'd say, yeah, that's cool, yeah, it's definitely a different environment, very, very good. So yeah, it's definitely a different environment.

Speaker 1:

Very, very good. So we're going to be talking about the company, your chief revenue officer, of Carbon Upcycling Very, very interesting concept for a business and we're going to be talking all about the stack technology stack you guys have, how you guys implement things where you're operating, et cetera, what the value proposition is and generally just to educate people on, you know, this sort of um reasonably new, I would say concept in, uh, in dealing with this kind of uh um substance, substrate, material, whatever you want to call it. So, yeah, it's going to be kind of interesting. Are you pretty excited about this field of work?

Speaker 2:

Yeah, I'm very excited. Actually, I spent a long part of my career working in investment banking, which is a bit of making deals left and right and just putting companies together, and then I spent several years working in the cement industry as a head of corporate strategy at Holcim and I have to say, when you're on the investment banking side of things, you're clearly enabling things and there's a value for that, yeah, but you're just kind of making money, passing money left and right. You're not actually building anything, right, whereas if you're in the cement kind of in the building materials industry, you're building stuff. So that's. It's really exciting to be joining carbon upcycling, because it's not only on the building side of things but it's building it with a purpose. Right, you're doing low carbon materials. You're enabling a change in an industry that has been very risk averse for many years. So, yeah, very excited and very excited to be here with you on your podcast.

Speaker 1:

Awesome, and you're two months into this position with the company with the company?

Speaker 2:

Yes, so I've been working with them for a short time. I've followed this space for several years. I've kept in touch with the building materials industry and I've seen some of the innovations that have been going on. There's a lot of very exciting stuff out there, but I think this one is at the verge or at the transition from an advanced technology startup to a kind of a deployment growth company.

Speaker 1:

Right on. Okay, well, I'm excited to hear about this because I love detail. So, as the chief revenue officer, you're going to give me as much detail as a non-engineer can give us, or a non-chemical engineer, for that matter. So, yeah, let's get into it as a non-engineer can give us, or a non-chemical engineer for that matter.

Speaker 3:

So, yeah, let's get into it. Welcome to the Site. Visit Podcast Leadership and perspective from construction With your host, james Faulkner. Business as usual, as it has been for so long. Now that it goes back to what we were talking about before and hitting the reset button, you know you read all the books.

Speaker 1:

You read the evening, you read scaling up, you read good to great. You know I could go on.

Speaker 2:

We've got to a place where we found the secret serum we found the secret potion we can get the workers in. We know where to get them.

Speaker 3:

One time I was on a job sale for a while and actually we had a semester concrete and I ordered like a Korean-Finnish patio. Oh fun, did you say? Chill these days. I was down at Dallas and a guy just hit me up on LinkedIn out of the blue and said he was driving from Oklahoma to Dallas to meet with me because he heard the Faber-Connect platform on your guys' podcast. Own it, crush it and love it. And we celebrate these values every single day. Let's get down to it. Let's do it. And we celebrate these values every single day. Let's get down to it.

Speaker 1:

All right. So, marcus, tell me all about this company and then we're going to talk about you and your background, because I just want for everyone to sort of hook them in to know what we're talking about here. Give us like the Kohl's Notes Do you remember what that is? I know some of. Give us like the Cole's Notes Do you remember what that is? I know some of the younger generations like Cole's Notes. What the hell is Cole's Notes? Well, for us.

Speaker 1:

it's just going to be that very succinct overview barbecue pitch on what you're doing, what your technology does. So if you could just give that, give us the leg elevator pitch of what it is Right.

Speaker 2:

So what the technology does is it produces a supplementary cementitious material, which is called an sem, which is another type of uh cementitious material.

Speaker 2:

So if you think of portland cement, it's one type of cement. Yeah, the romans obviously had their own type of cement, which was a post-holandic rock crushed into a small size. What we're doing is we're also activating certain waste materials or materials that are relatively inert, and making them active so that they can react with water the same way that a cement would react Different chemical properties and so on, but it's essentially the same concept behind it. And so the company, what it does is it developed a technology that is relatively people hate it when I call it a simple technology, but it's a simple concept behind it. But it activates things like, for example, well, materials that have been used in the cement industry for a long time, like slag and fly ash, that have certain properties. We're able to activate things that have lower activity levels, like electric arc furnace slag or fly ash that has been stockpiled for many years, and activate it so that you can use it in the industry.

Speaker 1:

When you say activate, that seems like a sort of an industry term. What does that mean to you guys? How do you? When you say activate, that seems like a sort of an industry term. What does that? What does that mean to you guys, and what is it? What? How do you describe when you say activate?

Speaker 2:

So um, think of it as as um like, if you put clay, you mix clay with water, it just becomes moth, right. When you mix a gypsum with water, it becomes a hard, it hardens, right. So that's the reactivity that you would have in a material. So certain, certain materials have different levels of reactivity and it the binding uh, force, uh, or the binding strength that it has when, when it's the uh after a certain while, it differs from material to material. Okay, uh, so ordinary Portland cement reactivity, if it has a reactivity level, let's say that you can achieve 100% of strength in 28 days with Portland cement. Some materials might have 80% of that strength at 28 days and some might have slightly above of that, like 120% strength compared to the Portland cement, percent strength compared to the Portland cement. So what we're doing is we're taking materials that have maybe a 60, 50 percent strength reactivity and bringing them to a level where they can have 110, 120 percent strength reactivity. So you can essentially substitute some of the clinker in the Portland cement with our materials.

Speaker 1:

Okay. So just to get this straight, because you know I don't know your industry much. We know about construction, but this is like down to the details. So in your, typically, what we see and everyone's used to is a pump truck shows up on the job site. It's filling in a slab, that's the deal. Or filling in forms. Okay, what happens back before that pump truck shows up? I mean, yeah, on the engineering side, obviously there's. You know what kind of mix you're doing, you know what kind of concrete you're doing. So you guys are are creating the products that are in that stack of what they would be choosing to use. Correct, right, okay, so that product. Then your customers are obviously the concrete companies that are ordering product for their clients.

Speaker 2:

Right. So the way that the industry works is when you have a job site, you would have the ready mix truck, pull up and just cast everything and it's being pumped by someone else, but the ready mix truck is the one that brings the mix to the job site, right, yeah, that ready mix truck comes from a ready mix plant that usually has a couple of silos with different materials. They usually have sand, gravel, water and then they have a silo for either blended cement, ordinary cement or the SEMs. So fly ash slag, for example, and think of it as a gas station, right, the truck goes in and just kind of pulls the different ingredients from each of the silos, mixes it and takes it to the job site. Gotcha, okay.

Speaker 2:

The part that we're working on is when you have ordinary Portland cement. That's a cemented space with clinker which is made in a calcined clean kiln that has a huge amount of emissions in it. The SEM is a byproduct from the steel industry or the power plant power industry. So either fly ash from the power plants or slag from the steel industry that they grind, and it has some of the same characteristics of the Portland cement. They can kind of add some of that supplementary cementitious material to the mix and displays the use of cement right. So what we're doing is kind of that SEM silo we're producing a material that has some of the same qualities of what they're currently using so that they can displace more of the cement side.

Speaker 1:

I see Okay. More of the cement side, I see Okay. So the value proposition here is many fold, obviously, but I'm just going to take a few stabs at the dark here. So first is the environmental impact of that material and what that You're recapturing that carbon in that product. Is that correct?

Speaker 2:

Right. So the reason why this is important, I think there's a couple of elements. The first thing that comes to mind, obviously, is the carbon capture that you're doing in the process and that has to do a little bit with our technology, and this came to being from a vision of trying to capture carbon carbon emissions and make it into a product that has some value added. So that's why it's carbon upcycling. We're upcycling some waste streams into something that's usable, value adding Now, but the big value of it is think of the.

Speaker 2:

I'm going to focus a little bit on the US cement industry or building materials industry. The US consumes about 120 million tons per annum of cement. Out of those, about 30%. So about yeah, let's say 30 million 20, 25 million of that is imported cement that comes from overseas. About five of that comes from Canada, but 20 million are coming from overseas.

Speaker 2:

When you look at cement, the value per ton of cement is actually very low. So when you're buying cement, a huge amount of what you're paying for is logistics right. So if you're importing something from Vietnam or from Turkey all the way to the US and then you're having all the supply chain and then you take it to the job site. A lot of that is just kind of wasted. Forget about the carbon footprint. It's a lot of wasted money from importing material that is low value to the job site. So what we're enabling is we can enable locally sourced materials so that you can displace some of those imports locally sourced materials that have a lower carbon footprint, not only from the logistics side of view, but also from the process that we implement to manufacture those materials. I think one of the big problems that we're seeing is obviously the carbon footprint gets a lot better, but we're displacing current imports. That, yeah, if you're looking at it today, it's one third or 28% of it, but demand is growing right, so that's that's going to be an increasing number over time.

Speaker 1:

Okay, that makes sense. So do you need that? Do you need the? When you say that the locally sourced? Locally sourced to what? To your manufacturing facility or for the project?

Speaker 2:

Um, no, so, um, what we, what we do, is we, um, we develop, the develop the projects together with the cement partners.

Speaker 2:

So we don't actually go with the ready mix partners. There's some exceptions to the rule, obviously, but usually we try to work with the cement partners to help them solve the issue that they have today, which is both the carbon footprint as well as the capacity. What we do is we have a line that is, an add-on production facility to what they already have. We take up CO2 from their flu stack, put it in our process, we put in some feedstock, which is either clay, fly ash or slack, we activate it and then that feedstock, or that product that comes out of our process, gets blended in with our cement or gets shipped out separately as an additive. Let's call it Okay, right, so when we're talking about locally sourced material, we're talking about using fly ash or electric car furnace lag that is available close to our cement partners, or clay, for example. Right, so it's not something that you have to haul hundreds of miles to get to our facility, it's something that is usually already there.

Speaker 1:

Excuse me, bad cold, but I didn't cancel. That's the main part. So, yeah, let's, can we just? Obviously now, I think people have an understanding of you know what the core stack is, what you guys do, and I want to jump back into that after. So, how did you get into this? So you've been in this position for a couple of months now. Yeah, and it's just the financial element of it and the environmental impact that attracted you to doing this.

Speaker 2:

No, I think so. I worked in the cement industry for a while. I know a lot of the people involved in some of the other companies, and this is one company that came up through connections and it was something that, hey, this company has developed a technology that is already good to go. I've had a lot of contacts with other startups in the past and a lot of it is still research and development, and so this one seemed like it was already at a stage where you could make a difference, and I had been working in private equity for the last five years and I just kind of yeah, was looking for one area where I could still make an impact out of something right and yeah, so that's a little bit of serendipity how we connected through the grapevine I guess the industry at the end of the day, is not so big. You know each other it seemed like the right moment to jump in and try to make an impact.

Speaker 1:

Are some of the other companies, like Heidelberg, et cetera. Are they trying to do some similar things to you guys like the Heidelberg, et cetera?

Speaker 2:

Are they trying to do some similar things to you guys? So, yeah, I think so. I think everyone is trying to figure out a way to kind of solve this problem. So the biggest problem I think they're trying to solve worldwide is clearly the CO2 impact, and that's probably something that they're concerned about in the mid to long term, that they know that they need to reduce emissions, uh, and and to stay competitive so take everybody, take everybody through that more in detail in terms of emissions and concrete so, yeah, so when you build um.

Speaker 2:

So emissions is a big part of the cement industry because of the limestone, the way that you activate it is you take the carbon out of the limestone and that gets emitted as CO2.

Speaker 2:

So it's not only from the combustion of fossil fuels in the cement kiln, but it's also the chemically.

Speaker 2:

You need to emit a lot of CO2 to get to the clinker that ultimately makes cement, and then cement is a glue that binds the sand and gravel together in concrete, and then concrete is obviously what you build the buildings out of, or at least the structural elements in some places.

Speaker 2:

And so the more buildings you have, obviously the more cement that you need, the more cement that you need. If you're producing it with ordinary portless cement, then you need to have clinker, and that emits a lot of CO2. So to the extent that you can capture some of that CO2 from emissions, as well as displace the use of clinker, you're actually reducing the carbon footprint from the cement industry, and today I think, depending on the like, the cement industry emits about 800 kilograms per every ton of cement that is manufactured. So if you're looking at 120 million tons of consumption in the US, that's roughly yeah, how much, I won't do the math right now, but it's 900 million tons of CO2 that are being pumped up in the air every year. So that's kind of the biggest issue out there from an environmental point of view and kind of the motivation for us I think everyone at Carbon and Upcycling too to tackle it.

Speaker 1:

Right so is there this is probably a dumb question and I think all listeners are like geez James, you're asking a really dumb question here. Probably a dumb question, and I think all listeners are like geez, james, are you asking a really dumb question here? But they're um, as the concrete is setting, is there an emission, emission element there? So as as the, as the concrete is like, let's say it's a concrete slab, for instance, pouring the slab, obviously you know it's mixed, it's in a liquid or not liquid, but it's in a pumpable form, and then it hardens. Is that hardening process there? Is that producing an emission at that stage?

Speaker 2:

No, it is not so. The no, no, no, so it's so, it's nothing significant. But the the uh no, so it's so, it's nothing significant. But the carbon footprint that you have is on the logistics side, but mostly on the production of clinker-based cement. Gotcha okay, and actually there's a couple of solutions that actually so concrete will reabsorb some CO2 or over once it's cast in place, and there are some solutions that inject CO2 during the casting stage so that you can absorb some of that CO2 at the job site.

Speaker 1:

Interesting. Okay yeah, okay yeah, because I keep hearing things about that. I'm just trying to sort of put those pieces together Now, so it's similar. It's basically the impact all the way from the logistics and chemical processes in the past in the manufacturing than it is on the delivery, right, right.

Speaker 2:

And I'd say about 95% of it, or I'd say maybe 85% of it is in the manufacturing of it, I see, and then some of it in the logistics.

Speaker 1:

Okay. So now when we talk about companies that are doing construction projects, that have environmental standards around them, in having LEED Gold and LEED Platinum, all that kind of stuff, so what is those particular types of programs? How does your product knit into what certain requirements there are for those programs?

Speaker 2:

to what certain requirements there are for those programs. So the one thing I want to preamble that with is that the regulatory part of it is relatively complex. You have a lot of standards that are dictating what you can do and what you cannot do in a job site, and I think that's, for good reason, One of the things that you cannot do in a job site and I think that's, for good reason, One of the things that you would do. When you have a LEAF building, for example, you're going to dictate some of the energy consumptions that it has, what the carbon footprint it might be, and so on. A lot of that usually doesn't trickle down to the material side. You can prescribe that it's built with low carbon cement, so a cement that has a lower carbon footprint than traditional, ordinary Portland cement. But that usually doesn't get all the way back to the material because at the end of the day you have to go through many parties that have different risk profiles, right? So the general contractor is going to have like if an architect says well, you have to build this building with low carbon cement, Now the general contractor has to find a ready mix producer that has low carbon cement, and the ready mix producer might not have it on hand. So it goes to the cement company and says well, I have a project for which I need low carbon cement now. So that doesn't necessarily happen in sync because the timing is off and whatever it is.

Speaker 2:

And when you look at the amount, the share of material in a built environment, it's relatively small. Right, Like you would have. I don't know how much of a building's cost is concrete, but let's say 10%. Out of that 10%, maybe 3%, is material cost and the rest is labor and other stuff. If you make a savings on that 3%, if you need to add 10% carbon premium or if you can buy it at a discount of 10%, it really doesn't move the needle for the whole building, Whereas the risk of trying something new you put at risk the whole building. You have to tear it down.

Speaker 2:

So the risk of adversity in the chain is absurdly high. We have no incentives to try something new. So when you go to a building code that says leave and you start defining some of the standards, it won't have. I think the last part that it trickles down to is material, I see, or the building materials. So it's a kind of very difficult industry to change from the demand side. I think you need to change it from the supply side as well or have business incentives that align across the chain.

Speaker 1:

Yeah, I mean, I think a lot of developers are are, you know, leading with a message that you know the buildings that they do and the mandates they have as a company is to have more sustainable buildings, et cetera. Also, when you have a lot of government programs, there are, you know, government buildings, institutions, et cetera, and on top of that sometimes when it's, um, you know First Nations land as well, um, there's this other, there's another environmental requirement, uh, to be the best possible, all materials, et cetera. Requirement to be the best possible, all materials, et cetera. You know, it kind of reminds me and it's interesting that you know Heidelberg obviously being in the business. The other business that they were in for years obviously is in printing.

Speaker 1:

You know the printing press and you know I remember a time I know we're totally off topic here, but there's a relative vector here is, you know, with printing brochures, letterhead paper. It used to be like, okay, well, you know, do you have that little recycling logo on there with the tree there was, I think it was fsc or something like that. There was a little and that meant something. Right, if you had your business card that had that little logo on it, you're like, okay, well, I guess now that means that you did actually care about the planet before you went and printed your you know 5 000 business cards that you're handing out that are kind of like garbage, with information on them. So are we? Are you seeing that now, um, with your product when you're pitching that, or your sales people are, is there? Is there a you could call it a building altruism there, where people are wanting to do things for that reason?

Speaker 2:

yeah, absolutely. I I think there's uh, you have this, no new technologies or new technology changes. You have this curve of early adopters and kind of later um and we're. We're seeing that across the industry where you have cement companies branding low carbon cement already and that's trickling down to the ready mix and at the same time in the value chain you have architects and designers and engineers that are specifying those types of cements and it goes a little bit to the branding that ultimately goes to the end consumer.

Speaker 2:

And right now the people that are adopting those low-carbon standards are large corporations or government departments that say well, I want to build a department of transportation, I will build all the highways with low-carbon cement. And that specification obviously moves the needle, because now it's not one single job site for a single-family home that looking for a low-carbon cement. Now you have to kind of retrofit the silos that you have at the ReadyMix plant and the blending units that you have at the cement plant to accommodate that Department of Transportation request, right, right. And so once you have that in place now, you start putting it towards the end customer. I see, once you have that in place now, you start putting it towards the end customer. So, for example, we're working together with a ready mix company out of Calgary called Burnco.

Speaker 1:

And they're one of the main players, right.

Speaker 2:

Yeah, and it's amazing because we have a unit that has been manufacturing about 50, 60, 80 tons per month at this pilot facility in Calgary and we've worked with Bernco for that and we've branded low-carbon cement for end customers. We've poured it on several job sites and what we do is we say, well, when they ask for low-carbon cement, we clearly supply it with your materials. But whenever they're not asking for low-carbon cement, we still use your materials. But whenever they're not asking for low-carbon cement, we still use your materials because at the end of the day, it makes industrial sense to have. It's a material that is good to use, increases volume, lowers our costs. And, yeah, people are not asking for it, but we're still supplying it. Right?

Speaker 1:

Okay, so that ReadyMix company. When you guys implement a program with them, what's the setup for them? How does that work With Burnco, for instance? Your technology is obviously. There's some hardware element to that. What's on site there? Can you take us through that part?

Speaker 2:

Yeah, absolutely. For cement partners and ready mix partners, this is a fairly transparent technology because at the end of the day, they're buying a product that looks and feels and smells the same way that their current products do. So it's as if you're buying a truck full of cement and just putting it up in a in a silo, right, okay, that's it. So they, when they start testing these things, they need to have a separate silo for for this and they need to do a lot of tests. And when you're talking to a remix producer that has, they typically are not as sophisticated, chemistry wise and so on, as a cement, as a big cement plant, right. So the the curve to adoption with them is much longer than than with a cement partner. So you need to do a lot of tests and you need to wait 128 days and look at the material whether it breaks or doesn't break. But once they've adopted it, it's a seamless integration. They just have a silo and we put our material in there.

Speaker 2:

We're also working with CRH in building out a project in Mississauga, outside of Toronto. That's a 30,000 ton facility that is being built today With the cement partners. What we do is we do a lot of material testing and once it's set up it blends at the job site, at their plant, and then it gets shipped out to the ready mix plants and they won't even know that it's a low carbon cement. I mean, if you don't tell them, right, you need to clearly tell them, but for them it's a low carbon cement. I mean, if you don't tell them, right, you need to clearly tell them, but for them it's kind of a one-to-one replacement of what they already do.

Speaker 1:

Okay, so I guess what I'm trying to sort of get my bearings around is you know if people will go to your website, carbonupcyclingcom, and you go to your technology tab carbonupcyclingcom and you go to your technology tab, um, you, you have, you talk about this. Cut co2 is modular. It's a skid mounted system. Um, take us through that, like what is what is this? What is that communicating here on your website?

Speaker 2:

um, all right, so you're gonna make me go back to to our website and see if it's updated. But essentially, what the technology does is the people will not buy the technology up front from us, because these are facilities that cost maybe 30 to 60 million for a unit Gotcha. And so what we have to do is we have to work with large partners for a long-term partnership agreement. So, with a cement partner, it might be a 10-year to 20, 30-year partnership where we commit to finding the feedstock that will be activated, committing to having that feedstock and that's it. So they have to adjust all the chemistry process and all of that for that, and then we have a consistent material running through that facility, right, okay, and so we typically have an offtake agreement with them at either a tolling fee or a licensing fee or whatever it is, so that we produce materials for them and then they blend it to the end customer.

Speaker 2:

I see so the technology, what we found and what's really attractive about it is we have three of the largest cement companies invested in our company. We have CEMEX, crh and Titan Cement out of Greece, and what they really like about it is that it's a bit of a plug and play technology, they, they just it's. It's something that's very similar to what they already have introduces this innovative idea of using CO2 to mineralize the materials but it's essentially something that they can just kind of plug and play and put right next to their, to their cement plant.

Speaker 1:

Gotcha, okay. So you guys have a couple of business lines going on here and being his chief revenue officer, obviously this is where the revenue is coming from, right? So you have the sale of materials. First of all, that you guys use your technology that you have created in order to make those an upcycle from locally sourced other materials. Correct, got that All right? So, and that is locally, depending on where your facilities are, for now, until you have your technology in some of these other partners' facilities, correct, correct?

Speaker 2:

Yes, correct, that's about it.

Speaker 1:

Okay, sorry, I'm just trying to figure it all out here, yeah.

Speaker 2:

Yeah, and I think that's an important part of our business proposition. I think that we're looking at this. It's a company that is deploying technology that we've tested around with different partners and we believe it works and it has significant benefits. 90% of it, or 90% of revenue today, would be from selling material that we produce. It has a low carbon footprint, but it's about selling material at a comparable cost to what they already have. You're not paying for a carbon premium in it, you're paying same production cost.

Speaker 1:

Right that you currently have right.

Speaker 1:

So that is so. When it comes to the developer making decisions with the engineers on what materials can be used for that project, the consideration of using some of your materials could be having the benefit of a low carbon mix or composite obviously, because you're only part of it. So that composite mix there you could plug in yours and it would be the similar environmental benefits of a low carbon. But the low carbon would typically be more expensive and yours comes at a price point similar to if you were not using any kind of environmentally focused components. Is that correct?

Speaker 2:

Yes, absolutely. That's the gist of it, the gist Our revenue model. The more that we scale up, the better technology will become and, I think, the lower the cost that we will be able to yield. But also we're betting on the future that there's going to be some value from reducing that carbon footprint. Yeah, so we're setting ourselves up so that we can capture some of that value as well going forward, which is, if you look at the carbon markets today are not as developed as we would like them to be. But if you look at the European market, for example, you have the carbon credits or carbon allowances that cost today about 80 euros per ton or 70 euros per ton of CO2 emitted and we believe that that cost is going to increase to about 300. And that regulatory framework is probably not going to change that. That framework is something similar will be introduced in across the world, because I think the, the uh, the co2 reduction imperative is going to be something that people are going to be more aware of. Okay, um.

Speaker 1:

So can you tell me how that? Um once that the calculation has been done in terms of volume, how much concrete is being used, with your product included or as part of that stack? Um the how do the credits work with that? So do you get carbon credit for using that particular thing, or is it tax break? How does, how does it all work?

Speaker 2:

so there's, there's two. Uh, there's two type of credits and like, or different types of credit depending on the geography right uh and you have some voluntary carbon markets and some mandatory carbon taxes.

Speaker 2:

Okay, so the eu what the european union, the way it works, is that it told the um industrial emitters uh, you're gonna have to improve your carbon footprint by a certain date and I'm gonna tax you for every ton of co2 that you're emitting. Okay, so that you don't go bankrupt day one, I'm going to give you an allowance. So I'm going to, I'm going to give you a certain amount of free tax credits so that you can, if you meet one ton of co2, you can use one of those credits, right? Okay, and that that amount that I'm giving you is, I'm going to reduce it year over year after years until it comes down to zero. So eventually, you either reduce your carbon footprint or you're going to have to go out to the market, buy that credit and give it to me. So I think it's a smart way of working. There's a lot of misaligned incentives in it. There's a lot of misaligned incentives in it. Obviously, all of these regulatory things that people put in place usually have unintended consequences, but essentially it is promoting a kind of a smaller footprint of the industry.

Speaker 2:

Now, in some of the other geographies, like Canada, you can go for a carbon credit. That's on a voluntary basis that you can buy two types of credits. One of them is for absorbing CO2 out of the atmosphere, and that's kind of the capturing element of it, and the other part is the abatement of. So you're stopping an industry from producing a CO2 zone that they would have produced otherwise. So we're capturing a bit of both. We're actually capturing some CO2 out of their flue stack, which is about 10% to 15% by weight of the product that we manufacture.

Speaker 2:

So I wouldn't say it's an insignificant part, but it's a smaller share of the CO2 footprint impact that we have. And the biggest one is that we're displacing 30% to 40% of the clinker-based cement. So we're abating 30% to 40% of CO2-heavy material that you would have been producing. And those two credits have different values to it and there's different markets and ways that you can capture it. But essentially we're betting that the price and the regulation around those credits is going to increase over time and that we're going to be able to capture some of it. So today, essentially, we're making a profit from like any other cement company would be, by selling tons of our material, but eventually a larger share of our profit is going to come from being able to impact the CO2 footprint of the industry. Right, okay.

Speaker 1:

So longer term. There was a couple of things that I can't quite square, so I'm just going to ask you these questions. So if I'm doing a building in Vancouver, for instance, and you don't have a ReadyMix company here with your product in their silo, a, I can't use your product, obviously, but B if I did want to use it and that ReadyMix company would contact you and say we'd like to be part of your program, we'd like to use your products, and they would do that. They would get your materials, but you would be shipping those materials correct, just like they would otherwise. But from where?

Speaker 2:

Well, it'll depend a little bit. I think over time our ambition is to grow our footprint so that we can cover most of the demand centers. Right, and we're going probably gonna go kind of in the first stage with the cement partner. So existing cement plants that are operating, yeah, um, and then help them increase their capacity. So if you have a one million ton per annum plant, we would add on maybe 200,000, 300,000 tons of additional capacity to that so that you would already be buying a blended cement that has a lower carbon footprint or have both of them shipped separately and then you mix them at the readiness plant or at the job site. I see, okay, at the readiness plant, rather Right, okay.

Speaker 2:

And I think that longer term is going to evolve into a hub and spoke model so that we also save on the logistics side. But if you don't have a, a cement plant nearby, then we would have one unit close to you with the, co-located with someone who's emitting co2. We would be capturing their co2 stack and grabbing some material that is locally available, like a clay, activating it with that and you would bring in the clinker-based cement from somewhere else to the ready-mix site or to the ready-mix plant and you would have a silo of our locally produced material to that. So you're saving logistics costs on at least 30, 20, 30 the of the actual cement that you use right, right, okay, so that's.

Speaker 1:

That's exactly the point that I was trying to clear up, because when you kept saying locally, um local product or local source materials, I'm like, well, how you can do that if you don't have a thing in every single place, you're not not gonna be local anymore. So yeah, so that's the longer term vision is that correct.

Speaker 2:

Um, yeah, I'd say it's probably the mid be local anymore. So, yeah, so that's the longer term vision, is that correct? Yeah, I'd say it's probably the midterm vision, because I think the constraint here is then, when we're looking at the large facilities, we need to have a high quality feedstock, which would be electric arc furnace lag and so on, and there we're solving a problem for two industries at the same time, which is the cement industry is getting higher capacity. The steel industry is also getting rid of the electric arc furnace lag, which currently they don't have any use for. So we're helping both of them solve an issue that they have.

Speaker 2:

Once we run out of electric arc furnace lag or fly ash to work with, we're going to have to use some of the material that has a lower carbon absorption, which is essentially clays, and clays you have readily available almost everywhere. The supply of that is fairly wide, so that you can have like one plant, maybe in Colorado, shipping in Denver, maybe shipping out the cement north, and then, let's say you have a cement plant in there, you would ship out the product to Boulder and then you would have an SEM production from carbon upcycling in Boulder, just supplementing that material. Right, that makes sense, and I'm using some other examples because I think Vancouver is already quite well supplied, but some of the more rural areas, yeah, it might be difficult, right.

Speaker 1:

All right. So where is this all going in terms of this focus on the low carbon footprint with buildings in general, the low carbon footprint with buildings in general? Like is this you you hear? I mean it is around the terms of regulation obviously environmental regulation that where you're sitting today you've got a lot of different mindsets there on deregulating things and you know if to to the whole drill, baby drill paradigm of just do whatever it takes to get stuff done. Do you see this uncoupling over a short period of time? Or do you see, like the, are the advocates changing their tune on this? I mean, how is this all? Or are they just ignoring some of this, this sort of buzz and noise that's around on deregulation?

Speaker 2:

buzz and noise that's around on deregulation, no so I think regulation is very helpful to incentivize change in certain areas of the economy that are kind of not so prone to be risk takers.

Speaker 2:

However, I do think that for any business to be successful, it needs to be independent of regulatory incentives or anything like that. It needs to be independent of regulatory incentives or anything like that, and I do believe that the biggest change driver for this is going to be the consumer side of things Consumer awareness. The more they become aware that this needs to be a circular economy. You can't tear down a building and then just kind of send it to a landfill. You need to find a way to recycle that demolition waste. For example, it's wasteful to be importing clinker all the way from Vietnam to be used in building cement core. That doesn't make a lot of sense. You should have locally sourced building materials for that as well.

Speaker 1:

So clinker, that's like an eponym. Is that like a name for a particular type of chemical? What is that? Yeah, that's like a. Is that like an eponym? Is that like a name for a particular type of chemical?

Speaker 2:

What is that? Yeah, that's funny. So the process chain goes you extract limestone, you calcinate it in a kiln and it becomes clinker. You grind clinker and mix it with some other things like gypsum, and it becomes cement and then cement.

Speaker 2:

so the clinker is a precursor of cement, of ordering of portland cement and then you mix cement portland cement, with sand, gravel and stone and water and it becomes the, the concrete that we use. So the cement is a binder. I see uh in the concrete and put clinker is the key raw material in Portland cement Gotcha. And so you can displace clinker, because when you have the calcination process for clinker, that's when you have all the CO2 emissions. That's a chemical reaction. That is the dirtiest part I see. And you can replace clinker by having some other cement-used material, like pozzolan and some other materials, which is exactly what we're producing right.

Speaker 1:

So what is the? I saw that you have multiple locations for the company, so is it just like a more of a global taking over the world of sustainable, concrete production? Is that how things are going? You guys have your big master plan Rubbing your hands.

Speaker 2:

Yeah, no, we're not looking for billions of dollars right now.

Speaker 2:

No, our ambition is to have a capacity of about 2 million tons per annum by 2028, more or less, which means capturing about 4 million tons of CO2 by 2030. The way to do that is you obviously want to start by the low-hanging fruit, where it makes the most sense for everyone, and so right now we're focusing on Canada and the US because of the demand constraints and we believe that that demand you're going to have increased demand for building materials, and the footprint, the supply side of it, is unlikely to change because you have so many regulatory hurdles from an emissions point of view, from just building new plants cement plants it's unlikely to happen in North America. So the supply base is going to stay the same, but the demand keeps on increasing, right. So we believe that that's a no-brainer from any point of view and we believe that it's a good way to make a difference and have an impact just by looking at the US and Canada first.

Speaker 2:

The second step, which is Europe, which is our second area of focus. I think the European riddle is tougher to crack because I think there's a lot of regulatory frameworks in place that incentivize this type of technology, but the demand for building materials in Europe is declining and you have excess capacity already. So if we set up a new plant in Europe, you're only making the overcapacity problem worse, right? So we need to be a little bit more creative on how we actually work with partners. And it's probably transforming existing sites from a clinker-based cement to 100% of our technology, so it's a more complicated market landscape. I think. After that we're going to be looking at some of the emerging markets and there's a lot of exciting business case from a financial point of view, but also from a market perspective, that we can actually create a lot of value in some of the emerging markets. But that's years down the road. So, yes, we're going to take over the world and make it a better place with a lower carbon footprint, but it's not in the near term, unfortunately.

Speaker 1:

Well, that's cool. I mean, at least you're in a business where you can sleep at night. You're doing good things for the planet, so that's cool. All right, so people can get hold of you on LinkedIn and also your website is carbonupcyclingcom.

Speaker 2:

Is that right, that's correct. Yeah, and we're excited to talk to people that have new ideas and other solutions. I think we're a company that likes to collaborate and our technology fits within a space that it's not exclusive of other technologies, so we can work with other technology developers as well. Yeah, so excited to hear from anyone who has any questions.

Speaker 1:

Perfect. Well, that's a perfect ending. Thank you very much. I have now been educated in your business, which is always cool. I learned so much from doing these podcasts. So, yes, never, never, never stop learning. So that's great, all right. Well, thank you very much. Pleasure chatting with you.

Speaker 2:

Thank you, james. Thanks for having me Great opportunity and lovely to meet you. Love your podcast. Thank you likewise.

Speaker 3:

Well, that does it for another episode of the Site Visit. Thank you for listening. Be sure to stay connected with us by following our social accounts on Instagram and YouTube. You can also sign up for our monthly newsletter at sitemaxsystemscom slash the site visit, where you'll get industry insights, pro tips and everything you need to know about the Site Visit podcast and Sitemax, the job site and construction management tool of choice for thousands of contractors in North America and beyond. Sitemax is also the engine that powers this podcast. All right, let's get back to building.