Robert Nicholson
Welcome to Powering Sustainable Ideas, a podcast series from RBC Capital Markets where we interview the leaders and companies powering the sustainable future. I'm Rob Nicholson, Managing Director and Head of the Canadian Power and Utility and Infrastructure group here at RBC Capital Markets. Today. I'm joined by Claude Letourneau, President and CEO of Svante, a Canadian carbon capture and removal technology company focused on hard to abate industrial sectors. Svante, solid sorbent based filter technology has the ability to be a much more affordable carbon capture solution for industrial and other applications. Claude, thank you for being with us today. Could you just take a moment and describe what Svante does and how it assists companies manage their carbon?
Claude Letourneau
So about 130 years ago, a Swedish scientist named Svante Arrhenius made the correlation between CO2 going into the atmosphere and then the increased temperature of the planet. So we named the company after him, Svante.130 years of industrial age the legacy now its left us with about 1000 gigaton of CO2 in the atmosphere accumulating and there's about an increase of 130 parts per million. Every year we have 18 gigaton accumulating in the atmosphere, and that's a staggering amount that we need to manage. Svante, go to market strategy is center around focusing on managing CO2 emission for three sectors. We're looking at biogenic carbon dioxide removal. Second one, industrial. And the third one is energy. So because CO2 monetization remains one of the key barriers to the rapid deployment at scale, we're focusing our deployment on the first market, which is the biogenic CDR project. Example would be pulp and paper, ethanol plants, waste to energy that are basically allowing us to take advantage of the revenue stream associated with the carbon dioxide removal market. call this thing, Rob, carbon management at scale in affordable to abate. Not hard to abate. Affordable to abate industry where nature is working in tandem with engineering solution to manage the CO2 emission. Our business model is to be an original equipment manufacturer and a technology solution provider for carbon capture. But we've grown our organization in three very distinct business units now. We have a product-based business unit that is selling the key proprietary equipment, which is the filter and the contactor, that are unique. We have a second business unit, which is a service base where were delivering process, package and turnkey carbon capture facilities in partnership with our APC partners. And the third one, which is a new one, is a project capital base. We call it devco, and it's acting as a co-project developer with our customer.
Robert Nicholson
Why don't we get into some of the some of the pieces that are important. And certainly, we're seeing governments and industrial emitters, you mentioned it yourself, are both under pressure to act. I'm just wondering what policy shifts or industry signals do you think are going to be the most important to accelerate real deployment of carbon capture?
Claude Letourneau
So if I look back at 2024, about a year a year ago, the carbon management industry was facing significant headwind, mainly due to US and Canada political uncertainties about the long term stability of the climate policy, not knowing who would be the new Government. And now we have clarity. And then second, the capital cost escalation environment that was created after the pandemic, basically had a capital investment of projects going up. And even though we had a higher 45Q tax credit in us, there was a gap that needed to be filled. There is recent tailwind, I would say that are positive in the industry. And I we see four of them. So in Canada, particularly the implementation of the investment tax credit, equivalent to a 50% grant on capital project, and a newcomer called Canada Growth Fund, who's acting as what we call a market maker. They have several long term CO2 offtake agreement deals that they're doing, Fast Track energy infrastructure projects that recently the Carney government has talked about, and the CCS are now part of the narrative in a sustainable energy future in Canada, and there's a renewed interest on the Pathway project. So that's positive for us in Canada. In US, major oil and gas players are now securing and developing very large CO2 offshore storage and in the US gulf cost primarily, but and also in enhanced oil recovery projects onshore. Thirdly in US, Trump calls it the ‘One Big, Beautiful Bill Act.’ Well, last week, it was passed, and it preserved the 45Q tax credit with enhancement that is now providing a one credit for projects capturing CO2 from industrial and power facilities at $85. So before you had $65 for reuse a new wire storage and 85 for selling storage. Now it's basically parity 85 so, there's an additional $25 for projects where you have reuse of the CO2. That's quite positive for us. And finally, I would say in Europe, the support of CCS project is increasing, primarily in the European community and UK, spurred by the European ETs and a new mechanism called the Carbon Border Adjustment Mechanism, called CBAM, that is now mandatory for steel, cement, electricity, fertilizer, and aluminum, and hydrogen. So I think those are the incentive that we were waiting for in the industry.
Robert Nicholson
And I'm going to just ask a little bit about that, Claude. You're delivering on solutions, and I'm going to use your wording for affordable to abate sectors. And you mentioned steel and cement and pulp and paper, but you're also supporting the direct air capture industry with partnerships like Climeworks. I'm just wondering, how did you decide to prioritize these particular industries and these sectors as early adopters?
Claude Letourneau
When you look at it extreme weather conditions, with billions of dollars of disaster happening more and more frequently at a social cost, estimated that $190 per ton of avoidable CO2. And it's on its way to 300 by 2040. So when you look at this project, that increase, it underscored the mounting price tag attached to climate inaction. As long as the cost of carbon mitigation is lower than the social cost, it makes sense to invest in carbon management. So governments are uniquely able to address the gap between the true social costs of carbon and what companies have to pay today to freely emit CO2. Emitting carbon is like using a credit card. Sooner or later, you're gonna have to pay the bill you. And failure to act now means it's going to be more expensive in the future. The feed stock of the green industrial transition that we are aiming at will be two things: capital, and the management of physical CO2 molecule. So we need to build industrial policies. You know, carbon intensity, carbon take-back, and carbon fee based on profit. The oil and gas industry can afford $25 per ton of CO2 if they have the obligation to store the scope 3 emission, which is the emission associated with the use of your product, or in the case of oil and gas and they can pass basically that $25 per ton obligation at about a $10 per barrel to consumer. The service based company, who emit a small amount of CO2, but they still do, they make great deal of profit, and the profit divided by the amount of CO2, if you take 1% of it, they can afford $100 per ton of CO2 to sacrifice 1% of their profit so that carbon fee can be used to buy CDR credit for industrial biogenic emitters like pulp and paper, like ethanol that we're looking at. There's about a potential of $25 billion at $100 per ton, equivalent to 250 million tons of CO2 that you could deploy every single year.
Robert Nicholson
So Claude, that's very interesting. We've talked about the big picture on the problem, and I wanted to specifically get into Svante’s answer. You have a structured sorbent, and you're a rotary sheeting technology, and it's quite different than what others have proposed for this. And I just wonder, can you walk us through the key innovations like the MOF coding and the modular design that have made your approach really scalable and affordable, which is a key part of this.
Claude Letourneau
This is the world first commercial scale manufacturing facility for carbon capture filters using solid state technology. So first, we have commercialized, at industrial scale, the first generation of rapid, kinetic, metallic, organic framework sorbent, which is the magic powder, basically, that allows us to catch the CO2 from post combustion CO2. This was done in partnership with Professor George Shimizu at the University of Calgary and with one of our industrial partner, BASF, large chemical company in Germany. Second, we've industrialized our solid sorbent filters using an automated roll to roll manufacturing process, very similar to how you make thin film batteries at scale. Third, we've developed an industrial scale rotary contactor, which basically allows us to continuously catch the CO2, release it pure and regenerate the filter every 60 seconds. And fourth, we've established a partnership with Samsung to develop a set of standardized skid mounted modules so that the balance of plant we could be leveraged through a standard rotary contactor machine that we designed, and we can basically leverage Samsung advanced digital engineering solution. So this is not just a science experiment anymore. It's a blueprint for scaling carbon capture affordably, reliably and at the pace climate progress demands. So we've cracked the technology code. Now we need to crack the code of CO2 monetization, and that's our next channel.
Robert Nicholson
You mentioned, the cracking of the code. What's the next innovation? Or what is the next piece that allows Svante to advance?
Claude Letourneau
Well, our current sweet spot is post-combustion of flue gas at 12 to 20% CO2. That's what you find in pulp and paper and cement. So we're currently developing advanced sorbents material, yes, that will be able to economically capture the CO2 at very low concentration, like 3% to 4% that you would see in a natural gas power plant. Everybody talks about AI and the need to double and triple the power generation. So they're all trying to put natural gas with carbon capture. That's a challenge to be able to capture the CO2 economically at 3% to 4% so we're working on developing these materials. And in our journey to reduce the cost of DAC system, because we believe eventually DAC will be required, we're developing longer life advanced sorbent, also for very low concentration, like DAC is .04 to 1% concentration. So all of these new sorbent can really be deployed at market very quickly, because we have a modular filter design in manufacturing. So once we've tailored the material to do these things, we can use the same technology to go to market quickly.
Robert Nicholson
And Claude you recently raised a significant amount of capital. I mean, I think it's certainly one of the largest, if not the largest, clean tech financings in North America in the last few years. And you partnered with folks like Chevron and Temasek and others. And much of the use of that capital was to build the facility you referred to in Burnaby. So thinking about now the ability to build at industrial scale, what does this milestone do in terms of unlocking your ability to build out projects and actually scale this on a global basis?
Claude Letourneau
So we call this facility in Vancouver the Redwood facility, and it's a pivotal moment in our commercialization of our technology, the carbon capture removal technology. This new manufacturing facility has an annual capacity to make filters equivalent to 10 million tons of CO2 more than enough to meet the demand for the next five years. So Svante is forecasting that the demand will exceed its manufacturing capacity roughly by 2030. So we have five years of entering the market, and then we believe we'll reach full capacity with that factory. So this is for us, first Gigafactory. And we believe that the world needs two to three more of that same size, you know, in 2030, to 2040 to meet the the demand. Just to put things in perspective, in terms of the needs, remember, I said we need, 18 gigaton or so to remove. Let's assume that carbon capture takes care of 10 gigaton. That's 10,000 plants of a million ton. That's 10 gigaton, 10,000 plants of a million ton per year. So if we have a 30% market share, that's 3000 plant that I need to deploy it over the next 30 years. So do the math, 3,000 divided by 30 years, I need to deploy 100 plants per year. This is a factory is going to do 10. So you see where this thing is leading. Eventually we'll have a cumulative capacity of about 100 plants a year.
Robert Nicholson
And you're not going to do that by yourself. Claude. I mean, you've been, you know, working with partners to get to where you are. I presume you'll be working with partners going forward. How do you think about a partnership with the likes of a Samsung or a BASF and Climeworks, any color on kind of your thought process on partners and the importance of partners?
Claude Letourneau
So when I joined the company about eight years ago, this is not my first startup, so I normally spend a lot of time understanding what the business model is, yes, and who in that ecosystem is required to execute such a large endeavor? So we decided to create what we call three strategic partnership platform, a supplier base, a channel to market, and customer. So I'll give you an example. BSF is a strategic supplier. They're helping us manufacture at high volume the sorbent material, the magic powder. Samsung is a strategic channel to market partner. How do you build two plants a week? You need a big partner that has capabilities worldwide to deploy these large capital projects. And finally, custom, Chevron, which is a lead investor, is a strategic end user, because they will basically invest in storage of CO2. And they also have to decarbonize their own industry. So we're working to remove the biggest barrier to the rapid deployment of industrial carbon capture, and by commissioning this Redwood facility, we're now able to rapidly expand our order book. So can you imagine, three years ago, I had to go to my board and say, ‘I need to invest $150 million into a facility to make filters that nobody has bought so far, and I have no purchase order, but build it and they'll come.’ So this can only be achieved through collaboration with value added partner to lift our commercial readiness and accelerate the deployment of world class commercial scale carbon capture facility. So our innovation and nimbleness combined with the track record of our network of strategic partner is the winning combination.
Robert Nicholson
Claude, when you look 5-10, years out, how do you think about success for Svante and industrial sale carbon capture, and what does that look like for you in the mid the midterm, five to 10 year environment?
Claude Letourneau
So within the next five years, we need to deploy basically a cumulative capacity of our technology for at least 15 million tons of cumulative capacity. So meaning 15 plants of a million ton. That's the goal between now and 2030 for us. 10 years from now, I wish, I really hope that the carbon intensity label on every single product you buy, similar to the nutrient label you see when you buy food, will be there, and that Svante will be the first call of customers to design and build carbon capture plan.
Robert Nicholson
Claude, it's been, it's been a fantastic discussion. I do appreciate you taking the time and speaking with us today. And you know, we just wish you and the team at Svante the very best as we all see an issue here, and as you describe it, we're managing carbon, there are attributes of carbon which are very positive and attributes that aren't. And I think it's just a tremendous way to look at the issue is solving the challenges we have, and they are big challenges. So we do thank you for taking the time and for doing that with us.
Robert Nicholson
Thank you again for listening to powering sustainable ideas brought to you by RBC Capital Markets. Please remember to subscribe to get more great content and be alerted about future episodes. This episode was recorded on July 7, 2025. if you'd like to learn more or continue the conversation. Please visit rbcc.com/energytransition.