Marine CDR: Mirroring lessons from biotech
What can experiences in a different industry teach about ocean carbon removal?
“History Doesn't Repeat Itself, but It Often Rhymes” – Mark Twain
So I’m going to let you in on an open professional secret: I’ve not always been working in climate! Most of my professional experience prior to 2019 was in biopharmaceuticals and healthcare. So 20+ years of lessons from my previous experiences shape how some of my thinking about problems that face early stage companies across the sectors of carbon removal.
While flying back from a marine CDR (mCDR) conference in my native city of Boston - literally drafting this at 37,000 feet - I came away impressed by the vast potential for mCDR to restore the climate to greenhouse gas equilibrium. But it struck me that many unique features of mCDR hinder a viable product development lifecycle model - moreso than other methods of CDR - which could jeopardize many promising startups in this space.
With that in mind, my 20+ years in biopharma business came rushing back as a potential analog to think about mCDR; per the Mark Twain quote above, history doesn’t repeat itself, but in the case of mCDR it might rhyme enough with biopharma to provide insights to solutions. To that end, I’m going to make the case that several specific traits of marine CDR make the lessons of pharmaceuticals relevant to developing impactful startups in that method.
First, some similarities between biopharma and marine carbon removal
High upfront expenses to unwind technical risks: First off, research in both ocean systems and human physiology involve working to understand the fundamentals of extremely complicated systems and how interventions might operate. Furthermore research in each of these endeavors is anything but cheap: Remote operated vehicles or autonomous underwater vehicle operations are quite expensive, to say nothing of costly time spent on a scientific research vessel. Similarly, in biopharma, it is not uncommon for startups to spend several hundred million dollars annually without any commercial revenue, contracting with clinical research organizations with worldwide reach to conduct trials of experimental human therapeutics.
This graph of a pharmaceutical product lifecycle sums it up well:
Both pharma and mCDR are highly risky, where underlying scientific principles are still unknown for solutions that are undergoing field testing outside of a laboratory setting. In biopharma, this leads to the hallmark long development timelines of most biopharma development - usually 7 to 10 years (or longer!) of clinical trials until FDA approval for commercialization. The development pathways of field testing and clinical trials are necessary to unwind those technical risks, offering a pathway to scaling once the smaller scale tests are completed.
High sales volume potential Projections for marine carbon removal startups depend very heavily on the scale of CO2 removal possible through oceans. Marine CDR proponents tout that 70% of the surface area of the planet are covered by oceans, to the potential to use that vast resource, suggesting a sizable potential to create carbon removal credits. Achieving more than $1B per year globally (‘blockbuster drug’ status) is the goal of many clinical development programs, with a payout over the life of the drug to recoup the operational expense of the development program.
Closely regulated pathways: Both industries have a VERY highly regulated pathway with important government gatekeepers holding authority over the ability to move forward with testing, development, and commercialization. The US Food and Drug Administration watches over clinical trials and provides the license to commercialize. In mCDR, interventions under development require approval from multiple regulatory agencies, which leads to a dizzying array of government bodies to navigate:
Commercial registration hurdle: Submitting data to a carbon credit registry carries the same gatekeeping function weight for registering a pharmaceutical product.1 As one who worked in clinical data management, the need for high data quality in mCDR - really across all CDR - is a key aspect of this. Note too that FDA can take 6 to 10 months to approve a drug, assuming the testing data package is complete; mCDR companies applying to registries often experience similar timelines when applying for their projects to achieve approval. Key difference: FDA and EMEA in Europe are government entities; leading registries for carbon removal credits are private organizations.
Important differences - not an exhaustive list, but important for the next steps
Market maturity: The biopharma sales representatives’ pathways to doctors offices are well-worn, and marketing channels are extremely well developed. Also, distribution through a retail or specialty pharmacy provides a way for the product to arrive to the user. To be fair, none of this exists in marine carbon removal - and in carbon removal at large. Sales and delivery are bespoke arrangements, while buyers of the credits are highly coveted in a market that approaches a state of monopsony2
Customer stakeholders for getting product to market : Pharma features three different stakeholder comprise the decisionmakers for drugs: the user (i.e. the patient), the prescriber (licensed medical professional), and the insurance payer (private insurance, or government). For carbon removal credits, the user, payer, and gatekeeping decisionmaker are the same organization, with a Chief Sustainability Officer, Chief Financial Officer, and CEO among the people within the purchasing company who jockey over which carbon intervention to employ.
Project deployment is different - mCDR would launch its carbon removal credit generating activities project-by-project, whereas regulatory approval in biopharma means a company can market and sell a standardized product nationwide.
Pathways forward
With this in mind, mCDR companies and those who support them can consider the following ideas as methods to get to market more quickly:
Compliance markets to support mCDR development. The path of an IPO for a precommercial biotech company is well known, because the market is well known and large ($1.48 T in 2023). In contrast, Marine CDR is sold on a voluntary carbon market which in 2023 was $723 million, while compliance markets for carbon credits nearly reached $1T in value. I’m not suggesting that mCDR companies pursue IPOs to fund research; rather, that solid compliance markets would offer a backstop for securing growth capital, project financing, or debt financing - all of which seek the certainty from compliance customers’ high volume of marine CDR credit demand. Policy advocates can focus on jurisdictions where compliance markets exist or are likely to exist in the future, to provide a market to unlock marine carbon removal. Any signal for a compliance market to accept a marine CDR protocol would represent a major step forward to offering a market commitment.
The AMC option. In the absence of such a compliance signal, an Advanced Market Commitment specifically for marine carbon removal would be a fund vehicle that could provide a guarantee of a market for marine CDR, in similar fashion to how an AMC worked with vaccines. Countries which already have significant interest in marine climate solutions (e.g. Japan) might be leaders in this effort.
Beyond Value Chain Mitigation. Private companies wishing to support mCDR could look to the Beyond Value Chain Mitigation guidance as well, which cites R&D funding as a potential outlet for carbon removal spend. A contribution model could pool resources that would offer a gateway for marine carbon removal, as the funds could be used for R&D or commercialization at scale.
Oceans have such vast potential to heal the planet, and to fulfill that promise a new model is needed for funding new ventures. Biotechnology could be a useful analog, where publicly traded private companies execute on long, expensive research timelines - with the caveat that market need and sales channels for a pharmaceutical are extremely well defined.
Readers, what do you think? Feel free to comment here:
Opinions in this post are the author’s own, and do not represent the position of any employer.
Here’s a link to CDR project data best practices for carbon removal credit buyers:
https://rmi.org/event/a-buyers-guide-to-carbon-credit-data-quality/
Definition: market dominated by a single buyer. Sometimes seen in localized labor markets where the lone factory in a small town ‘buys’ the labor provided by workers. https://www.investopedia.com/terms/m/monopsony.asp)
Thank you Jason.
Very interesting analysis. In terms of economics, I would like to propose a slightly different angle. As any other product, mCDR (or CDR in general) should have solid economical basis. It needs to save money or it needs to generate revenues for its customers (ideally, both). mCDR (CDR in general) cannot rely upon ever changing carbon credit market which is not even yet regulated. What does it mean? It requires to generate a product. A real (by)product.
Here is another difference: the equilibration time scale for ANY mCDR (the time it takes for air CO2 to fully dissolve into the ocean in response to the mCDR) is up to 18 months by which time the signal has dissipated - it is not measurable. Imagine a drug whose effect on the patient is unmeasurable!