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Christine Lam

Principal

Equilibrium Capital

December 14, 2021
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Ep 53: Christine Lam - Principal, Equilibrium Capital
00:00 / 01:04

Michael Crabb
Welcome to another episode of the Energy Impact podcast. Really excited to hear from our guest today, Christine Lam, Principal at Equilibrium Capital. Christine, great to have you on.

Christine Lam
Thanks for having me. It's a pleasure to be here.

Michael Crabb
Well, really excited to kind of dig in and hear about what you're working on now, but first, let's start from the beginning. Where are you from?

Christine Lam
Yeah, sure. I'm actually from Houston, Texas, so born and raised in Houston, Texas in the heart of the oil and gas industry. So when it comes to energy, energy has been part of my life since the very beginning.

Michael Crabb
Interesting. So was that something you were aware of when you were growing up and a space that you wanted to get involved in? Or was it just sort of around town?

Christine Lam
No, I would go so far as to say I was intending not to be in the industry. And the reason being, so my dad actually worked for Exxon. He worked at the large oil refineries in Baytown. And after he left Exxon, a good chunk of his working career post-Exxon was at a privately held gas pipeline and transportation company headquartered in Singapore. But the way I was raised, my parents are first generation Americans. So they're foreign born and their mindset in raising me and my brother was to provide for a better life. And they had sort of this preconceived notion of what that meant and really came down to two things: we could either be doctors or we could be lawyers. My mom, I would classify her as the stereotypical tiger mom. So by the time I went to college, I was by no means rebellious, but I'd wanted- I had this urge to pave my own path. So that meant no doctor, no lawyer, no energy, no Texas. When I left college, my goal was to find something that was fulfilling that allowed me to also leave Texas and do something different and knew that I had decided for myself.

Michael Crabb
And was it at this point that Texas just was associated with energy? I mean, energy is obviously a global thing, or was that sort of two different considerations?

Christine Lam
I think that at the time, the major industry- I mean, if you grew up in Houston, you were either likely to work in oil, gas, power, or healthcare. And it was becoming an even bigger industry, I think, at the time that I was going to college. I mean, my parents, where they live now and where I grew up, they're like a 15 mile drive from what's the energy corridor in Houston and so it's where it was getting built out in my final years of high school, but where all the large oil and energy companies were coming to this industrial or this eco park that was being built out. So it's just then the major industry there and it was always- it's known for that and that's what you- to a certain degree, I think you expect to go into those industries or you expect to touch them.

Michael Crabb
And so you went to school, you knew you wanted to rebel. Clearly, it didn't work out quite the way you expected. Walk us through that progression.

Christine Lam
Yeah, sure. So I moved to California after college and took a job at Wells Fargo. I had worked as an equity analyst in a mutual fund company and then moved over to capital markets working in structured products. And after a couple years there, I sort of had this epiphany one day because, in my role working structured products, we were basically utilizing exotic derivatives - so the non-vanilla financial instruments, anything you could think of - to build creative solutions for risk management or certain types of payouts.

Michael Crabb
For equities trading or specific commodities?

Christine Lam
Across assets, so equities, commodities, some tips related. So it was quite interesting. And it was- there was an energy and a buzz to being on a trading floor. Just one day, I'd woken up and it occurred to me, I didn't have that fulfillment that- I just had this urge. And I started to think and ask myself, Okay, what is the impact of what I'm doing? It almost was odd to me to sit and have that reflection that, with a keystroke, we were moving and transacting hundreds of millions of dollars on a derivative, which is not a tangible object. So I started to reflect. And I thought, well, if we could do this, if we could use financial instruments to create all these different solutions, we surely can use finance for impact. And that's what led me into pursuing impact investing or sustainable finance. From that role, I worked briefly for a former colleague who was looking to launch a farmland fund based on regenerative ranching practices. Back then, that was a novel concept. Today, much more prevalent and in the mainstream.

Michael Crabb
And when is back then? Right, I mean, this would have been days of impact investing, right?

Christine Lam
Yeah, 2011 timeframe. I think at the time it was sort of something that was starting, a movement that was starting. But if you said impact investing, people- or the natural reaction that came next was, Oh, you must be giving up market returns, or this is nonprofit. How do you make money here?

Michael Crabb
Sure.

Christine Lam
So it hadn't really grown legs yet, I think at the time. So I made intentional steps, or took intentional steps from there to move into that world. Was still not entirely linear. I ended up going back to grad school, because I thought of it as a little bit of a career switch. And then after graduation, I worked at BNP Paribas in their power and gas group. And at that time, BNP had a physicals commodities desks, so they were really active in power, gas, oil, also had a very strong project team and tax equity. So I had the opportunity to work on utility scale financings of wind farms, power generation facilities. And one of the great things about that opportunity was I worked with really great people who were veterans of the industry. They had decades of experience, so I learned a ton. And I'm almost embarrassed to say this, but having worked in energy, I had never realized before then how nuanced the energy markets were and all these little bits and pieces about, you have a node, you have a hub, and there's basis risk here. And so it was- I feel very fortunate to have had that experience and to have had that role at BNP. I got to see a lot of financing, structured financings come together and participate in them. But at the end of the day, I still had that same nagging feeling that I had before when I worked in structured products which was, I felt still a little bit removed from what I ultimately wanted to be doing. And looking at the financings that we were doing, because they were project finance transactions, they needed stabilized cash flows and cash flow hedges. And so one of the products that we offered as a bank were those cash flow hedges, whether it be a synthetic PPA, the heat rate call option, or revenue. But when I thought about that, there was the same thought that I had at structured products, which was, oh my gosh, look how innovative this is. You have this financial tool that mimics the operations or should mimic, is supposed to mimic the operational parameters of a power plant. And so we're modeling this very complex financial tool. And so I felt, again like, well, if we can do this, then certainly we can use finance as a tool to create an environmental impact at scale. And I wanted to be more directly involved in that effort, so that's what led me from BNP to my role at Equilibrium today. It's come very full circle, having been pretty adamant that I would not be in energy and now being right in the mix of it.

Michael Crabb
I would posit that the energy industry of today is practically unrecognizable from the energy industry that your father was in. So it's a little bit of a rebellion still.

Christine Lam
It's super interesting, though, to see the change that has taken place. I was in Houston a couple of weeks ago visiting my parents and friends - I still have a large contingency of friends there, a lot of whom work in the industry. In talking to them, I don't- versus talking to them maybe even five years ago, no one ever expected there to be this kind of change that we've seen in the last, call it 12 to 24 months. Some of my friends would have even gone so far as to say things will never change here, this is just the way it is. But now, in Houston, I think there's broad sweeping support for this energy transition that is unfolding. And we would have- I think five years ago the expectation was, Oh, no way, that will never happen. And it's going to be feet dragging, people are gonna sort of lobby against any movement. There's no way anything ever changes. It's just too deep rooted. But that's not the case at all, which is very exciting to see.

Michael Crabb
And I think, in large part because of some of the financial solutions, right, that being able to commercialize new technologies over time has enabled some of that change. Like, oh, it's not so scary, right?

Christine Lam
Right. That's exactly right. I think there needs to be those incentives and the tools to push technological advancement and then also adopt certain processes and improvements. So just thinking about things like carbon capture, that's something that's talked about pretty widely today as part of the solution to decarbonisation. But there needs to be an economic incentive to do that. That's not new. That's been utilized in the oil and gas industry already. But for wide adoption, there needs to be that economic incentive to adopt these technologies and processes. And so we'll see with 45Q, which everybody is anxiously waiting to see how that turns out.

Michael Crabb
Yeah, we could go down a rabbit hole pretty quickly on tax credits. Let's put regulatory incentive discussion to the parking lot for a second. I do want to come back to it, because it's one of my favorite topics. But we kind of left off here with you coming to Equilibrium Capital. Talk to us more about sort of your specific role there. And have you been able to accomplish some of those things that you were hoping to accomplish around impact and using your skill set to really to really make a difference?

Christine Lam
Sure. Let me start with Equilibrium as a firm, because that was also part of my decision making was, I was clearly looking for something very specific in a role and what I would be doing in that role, but also, more broadly speaking, that cultural fit. We have to align what the company is doing with what I was looking for. So Equilibrium Capital as a firm is a sustainability-driven real assets investment manager. The firm was founded in 2008 based on the principle that sustainability itself is an economic driver and a competitive advantage. We also are a research-driven firm. Beyond the sustainability component, we are looking for areas where there might be mispriced risk or inefficiency. And so that's how we develop our strategies via research. As a result of that, we are at thematic shop. We first started in green real estate, so LEED certified buildings. We also launched a permanent crop strategy that was focused on applying sustainable farming practices to improve yield and quality and then also included the midstream processing of the crops. And then our current, our two current strategies are controlled environment agriculture, and carbon transition infrastructure. And the controlled environment agriculture strategy is really one that gets to the heart of food security. We invest in large greenhouse facilities that grow things like tomatoes, lettuce, leafy greens, strawberries. But it's really about the reliability of the food supply chain being climate adaptive. What happened in the winter storm in Texas where all of, I think it's like $600 million worth of agriculture was wiped out, greenhouses are climate adaptive. And then it allows for regional sourcing of agriculture and food, so fresh food closer to the end consumer. The other strategy, which is the carbon transition infrastructure strategy is the one that I'm on. At a very high level, we're focused on distributed infrastructure that accelerates decarbonisation across industries. Where we've spent most of our time is in the waste to value sector, or subsector, with waste really being anything that is a byproduct that would otherwise be disposed of or forgotten, so out of sight, out of mind. And that's really across any processes, whether it's an industrial process or an agricultural operation. My role on the team is really, in conjunction with my teammates, looking for investable opportunities and deploying capital into the space in order to scale the strategy. In terms of have I been able to find the role that I was looking for, I think, absolutely, yes. It has been a really great transition. But what I would say is, moving into this, it was both a natural transition, but also an eye opening one at the same time. It is very different to be on the lender side than it is to be on the owner side. And it comes with a totally different risk outlook, but also different level of accountability and ownership. Then at the same time you couple that with being in sort of a less mature market. There's just much more that has to come together, I think, that isn't really an off-the-shelf item that you kind of put together to get to a financial close.

Michael Crabb
So much to unpack there. I do think it's interesting to hear that your career progression went from sort of very short-term, high volume sort of derivatives contract, sort of stretch the project duration out, and now you're sort of investing in 10, 20, 40 year projects. I've been on the buy side, so I can empathize a little bit with that, how do you really forecast that far forward?

Christine Lam
Right. Going back to the firm's principles, when we think about sort of ESG, we're not picking just the E, the S, or sometimes G. It's all things. All of that is one thing that goes down to the bottom line. We don't think of it as triple bottom line. We think of sustainability more holistically, that this is partially a risk management tool to ensure stabilized cash flow. We're thinking about all the stakeholders and it's a lot harder when you're thinking about everyone to make decisions. And sometimes it is much easier to make a short-term decision. I mean, I think this is pretty common, because I think when you look at public capital markets, this is one of the issues is managing to quarterly earnings versus on long term value, right. In our DNA, we are looking at the long-term value, but as an owner, you're constantly faced with these short-term decisions, but you need to really think about all the stakeholders and what we're doing in an industry that hasn't matured, there is a lot of stakeholder engagement that has to take place.

Michael Crabb
Yeah, I think in some way this is getting a little grandiose, but in some way you could call climate change just humans mispricing long term risks. I mean, and so how does that tie into- you mentioned the economics of all having this underlying thesis that sustainability will drive market or premium than above market returns. Is that predicated on just the stability of an ESG asset versus others, or that sort of regulatory environments catch up to what we need? Without giving up sort of your secret sauce, what actually drives the economics related to the sustainable and environmental metrics?

Christine Lam
Sure, it can be both. At a very basic level, it's what you first mentioned where that sustainability is taking into consideration all of these externalities, including the climate. And so, as an investor, as an asset owner, we're more prepared for those issues, but also looking at markets that benefit from being prepared. So there is a resiliency component to the asset itself, which then translates to what we expect to be stabilized cash flow and more resilient and robust cashflow as a result. But then, on top of that, having the climate change or climate related issues be priced in in the form of credit markets, also adds additional value in certain circumstances. So as we think about renewable natural gas, for example, we participate in the renewable natural gas markets and that's one where the value does come from, effectively, the cost of CO2 emissions or greenhouse gas emissions.

Michael Crabb
Which kind of brings us back to that regulatory conversation. I mean, talk a little bit about how you evaluate these long-lived asset classes, given that constant change.

Christine Lam
We could go down a rabbit hole here.

Michael Crabb
A little bit, not all the way, but a little bit down the rabbit hole.

Christine Lam
Yeah, I mean, I guess first and foremost, that regulatory environment is important. I think this is the same at a very high level for all industries. You want to have a stable regulatory berming, because you want to know what to expect. And that's even from a very tangible physical side of building out the facility. You want to understand the permitting process you need. It's not feasible to be in a situation where a permitting process takes three, five years. That doesn't allow us as a country or an industry to move quickly enough when things take that long. So I think the regulatory aspect to what we're doing and what we're trying to achieve is really important. From a pricing standpoint, same thing. It's the stability. And you can see it in the RECs, the low carbon fuel standards credits in the RINs. Having the stability in those markets, knowing what to expect creates for more liquid markets. And then it enables greater financial capital to move into those markets. And so I think that's super critical. For us, I think this question comes up for any investor, really. If part of the value that you're achieving is in the credit markets, which is a regulatory regime, how do you get comfortable with the long-term value. And one, the stability, the near-term stability makes a huge difference. I don't think we would ever say we feel confident that we know 10 years from now LCFS, or low carbon fuel standards credits, are going to trade at "x" dollar per credit. We'll feel good about the near term, what that looks like and the supply and demand expectations of the near term to support our forecast of prices. But beyond that, we're thinking much more macro and directional. And if that confidence is there and the directional movement over the long term, that allows us to get comfortable. Then at the same time, because we are project finance investors, we are still working actively to manage risk and contract in a way that allows for some de-risking of the cash flow.

Christine Lam
Have you seen an increase in, or even any availability of some of the derivatives contracts we were talking about for some of these maybe earlier stage carbon-ish markets?

Christine Lam
Yes. RINs and LCFS do have active derivative markets for hedging. They are not very liquid markets, so fairly thinly traded lower volume, although what I would say is it has increased in the past few years. We have not utilized financial derivatives to hedge. I've heard of other parties utilizing financial derivatives to hedge their credit exposures in the LCFS market. But my understanding is that the bid ask is still fairly wide, so the premium that you would pay for an over the counter hedge is- it's hard to get comfortable with that type of premium.

Michael Crabb
Is that a liquidity issue? Or just sort of a market size issue? Or maybe both? Maybe those are two interrelated.

Christine Lam
think it's both. Yeah, I think it's, and they don't, and my understanding, too, is that they're not long dated hedges. So at best, maybe you're hedging out, you know, two years.

Michael Crabb
Well, and today's cost of capital probably doesn't- it doesn't get you a whole lot for that.

Christine Lam
Right.

Michael Crabb
So maybe let's hit that a little bit. Your firm's been in the space since 2008 I think you said and you've been at the firm now for a handful of years. Talk a little bit about the investor demand and how that's evolved, first from sort of purely economic to environmentally focused or ESG focused, and now this sort of trend of, okay, what does that really mean? And how do we measure it? Can you talk maybe about how that marketing has been from your side?

Christine Lam
Yeah, sure. It has changed quite a bit in terms of receptivity to the impact component. And I would say, when we first jumped into this carbon transition infrastructure strategy in particular, I don't think we ever really talked about impact. It was really focused on the economic value that could be created. And oh, by the way, there is this component, environmental impact component and this resiliency component to these assets.

Michael Crabb
Particularly for the energy focus, or for all- yes.

Christine Lam
That's right. Yeah. And so it really- the focus really was about what is the economic value to these strategies? Today, it's almost the reverse in that investors are looking specifically to have impact with their dollars. I heard recently that one out of every three professionally managed dollars has an ESG component mandate to it. And so I think it's hard these days to go through a conversation with an investor and not have the subject come up. I think everyone is looking to be very intentional with how they're deploying capital. And it's not just to say, Oh, we're being impactful, but in recognition that, if you're investing for the long term, there are all of these issues across known environmental issues, social issues, that could pose risk to the value of the asset or my investment over time. And so I need to make sure that what I'm investing in is taking his into consideration. And that over time, the value will either be preserved or grow.

Michael Crabb
Yeah, that makes sense. And yeah, the one in three, I've heard that thrown around as well. And it certainly starts with the T, trillion, right? It's a big number. And obviously some of the big money managers have been pretty outspoken about it. It's certainly become a hot topic and we'll see what sort of the long term measurables come from that. It's probably also- well, not probably it has created a lot of potential competitors or a lot of activity in the space. Competitors is maybe unfair. I mean, I think there are a lot of projects out there at the same time. Maybe talk a little bit about your specific niche. You talked about a little bit mispriced risk, but asset based. So where are you on sort of the technology spectrum and what are you seeing as trends here over the next couple of years?

Christine Lam
We don't take technology risk. We're very much project finance oriented in that way. But in terms of the opportunities and mispriced risk, that is precisely what led us to focusing on waste to value and thinking about, say, as an example, dairy manure to RNG, because that's become more mainstream. We're tackling two large emitters or greenhouse gas emissions emitters, in the energy side and also in the agricultural side. But then, if you think about how a project like that comes together, it is a biogas project. On the gas side, all of that equipment exists in conventional oil and gas facilities, so we're using the same gas upgrading technology. It's all the same pipeline, all the same infrastructure that you've seen the gas world, the conventional natural gas world. But you're combining that with a totally different industry and combining gas with dairy. And it's that intersection and combination of the two industries I think that makes the opportunity challenging, but also one where we do think you there is sort of an opportunity to create value. And it's not a market that is- it's one where there are high barriers to entry, I would say. To your point about how there's just a lot more activity in the market and how the momentum is driving attention and new participants and perhaps making the landscape more competitive, I think that's absolutely right. We see a lot more people interested in the same space. Those participants or interested parties weren't there even three years ago. But I think, for us, why we still think it's a good opportunity, waste to value and specifically to renewable energy, is because of that marrying of the two industries. It's quite challenging. And then you throw on top of that, whoever's the financing party and you have a Wall Street person with a dairy farmer with a gas person. All people are very smart, very good at what they do, but they don't understand each other's cultures. There's not a huge amount of trust probably between these different parties. And so bringing all that together and then being able to understand the feedstock management I think is critical. By necessity, having to understand the industry and the operations of whatever the feedstock is for creating that biogas is the most critical part of making the project work.

Michael Crabb
That makes a lot of sense. The closest corollary I have is looking at biomass plants, which is similar, but a different feedstock, obviously. Maybe- is this sort of synergy- I mean, it seems to fit right in an Equilibrium Capital sort of footprint.

Christine Lam
Right. Yeah.

Michael Crabb
You talked about the sort of thematic sourcing and discussion. Was this something that you had identified and then you sought out opportunities? Or did you get some inbounds and then as you peel back the layers, you were like, Oh, man, this is a good fit. Talk a little bit about how these opportunities are sourced.

Christine Lam
Yeah, that's right. So it was internal research where we actually have a research team within Equilibrium. And we have a dedicated annual budget that goes towards research. And so we're constantly looking for ways to develop- new proprietary strategies that we can develop. This was born out of Equilibrium in-house research. We saw this opportunity and then started to go from there.

Michael Crabb
Can you - without giving away sort of firm secrets - maybe share what are some of the themes that you're keeping an eye on for the next handful of years?

Christine Lam
Sure. Looking out, you and I had talked about this briefly how it's hard to predict the future and no one can. And things today, especially, are moving super quickly.

Michael Crabb
Lawyers, I'm gonna blame lawyers for creating all finance professionals have to caveat their answer to this question. So I get it.

Christine Lam
So when we think about the future, and specifically when it comes to the carbon transition infrastructure strategy, we think what we're doing today has a lot of legs to grow. I think we've only scratched the surface. Going back to the topic of new entrants into the market, a lot more competition, I think there is - or I've seen, at least - a perspective that, Oh, this is just like XYZ industry. And I think that can be said for anybody who's going into something new. It's easy to overlook. I mean, that's what I- that's the experience that I had when I had finally joined BNP and was like, Oh, my gosh, this is very nuanced. But I think from that, there will be a lot of unintended consequences and further opportunity. We feel like what we're doing today has legs and that there's a lot more to do in terms of aggregation of renewable feedstocks that then create renewable natural gas, renewable electricity. In thinking about the different tools for decarbonisation, there are a lot of options: hydrogen, nuclear, carbon capture, natural gas, electrification. And we think all of those have a place. And we're excited about where we sit today, because what we're doing today, in many ways, can extend to and follow along any of these sort of prevailing technologies and sources of energy. Now, whether that be renewable natural gas, supporting renewable hydrogen, or renewable natural gas use for electrification, or renewable natural gas to bring down the carbon footprint of natural gas usage. we feel like we're sort of in a really good spot to follow and be part of whatever unfolds next and our expectations that all of these technologies have a place in the future. I think sometimes the conversation can turn into a, No, we need to stop all fossil fuels and we only do this. But with more disclosures, more reporting, I think it will become more evident that different tools make sense for different uses and provide that impact that decarbonisation in certain applications. So we're watching all of these different paths to decarbonisation. I feel like that's very broad and high level.

Michael Crabb
That's good. I was going to ask how you think about- you said you don't take technology risk, but a lot of these people describe new- define new technology different. So maybe elaborate, you're clearly following a lot of, at the very least, new applications. What do you look for? Is there a checklist? What qualifies for you as sort of proven versus new technology?

Christine Lam
Sure. So utilized at scale commercially. If you think about hydrogen, we view that - and I think it's across the industry viewed - as still early in the technology curve. The at-scale commercial utilization of, say, electrolyzers is not quite there yet, in terms of sure it works, but it doesn't work at a cost competitive rate, so it needs to come down.

Michael Crabb
Economic analysis, you can prove the technology. Okay.

Christine Lam
So there's no doubt that electrolysis works, but does it work at scale and economically?

Michael Crabb
Got it, got it. Yeah, I guess that makes- I mean, if you're focused on project finance, which is maybe a unique part of the equilibrium capital mandate and some others, a lot of people that we talk to is sort of services or SAS based, right. There's sort of a different risk profile as a project based investor.

Christine Lam
Yeah, that's right.

Michael Crabb
That's super interesting. So what- how do you evolve then? Is this sort of the part of the sandbox that commercialization project development type investor? Or do you see yourselves maybe moving one way or the other over time as you grow?

Christine Lam
Well, we do - from an investment standpoint - participate across the asset lifecycle. So we will get involved in development, but we're not equipped necessarily to be a developer. I would expect that as the industry matures, where the industries that we are participating in do mature, we would start to have sort of a tilt in how we invest and how we scale the strategy where it is maybe more of a mix between project investing and maybe backing management teams. I think it's hard to say, because our bread and butter is project investing. But if you look at what we've done to date, I think there's just a lot more to grow. And going back to my sort of vague comments about where we think or what we're excited about in the future, where we're investing in terms of waste to value and being in a distributed infrastructure strategy, there's just so much more growth and opportunity, I think, beyond what we've already done. So if you think about a dairy to RNG project, it takes manure from a dairy operation or multiple dairy operations, in some instances, processes that manure, so provides for a waste management service, captures the biogas, upgrades it, and injects it into the interstate pipeline for transportation fuel use.

Michael Crabb
So it's pipeline quality blends, right?

Christine Lam
Right, exactly. But in terms of the value that we create from or that we generate from that renewable natural gas, the more negative our carbon footprint, the more value we get for that molecule of gas. And so then you start to think about other things, like how do we manage fugitive emissions better? How do we reduce our utility usage and make it more green? Does it make sense to have a solar project that also- or solar form of electricity supplying electricity to the project? And then at that point, does it make sense to have a solar project that doesn't just supply the energy for the project itself, but perhaps the host dairies? And then it starts to take legs from there. Then we can start to build this distributed micro grid for the local community. And to a certain degree, like in Oregon, for example, Oregon also has an LCFS program. You could just keep - if you have an RNG project in Oregon - keep that natural gas local and then you're creating some, going back to that resiliency concept and micro grid and district energy, you can keep all of that local and support energy independence in these small regions. And coming from utility scale financings - which I know that's part of your background as well - there are a lot of efficiencies that you get out of utility scale infrastructure. It's important, but at the same time, as we continue to build on something that big, you're just building complexity. It's harder to address issues. Having these distributed opportunities that we might currently just have an RNG project, but there's so much more to do there that builds out that distributed energy infrastructure. Those are some of the things that I think about when I think about the opportunity and the growth and where do we go from here.

Michael Crabb
Super interesting. I guess that must be a pretty scalable market. I will admit, I have no sense of the TAM related to cow manure, so I don't have a good sense, but it's got to be pretty large.

Christine Lam
I think the issue with dairy manure is you want a large quantity of manure in order, because if you think about the amount of biogas you're creating, it's minuscule compared to what you get from E&P of traditional natural gas falls.

Michael Crabb
You're driving, you're gathering it and transporting it to kind of a centralized facility? Is that-

Christine Lam
In some instances. In the dairy industry in the US, most of the dairies are maybe sub 2,000 head dairies. There are some that are sort of larger scale where there are ten, twenty thousand, thirty thousand head of cow in one operation, but those are not the most prevalent. And so in order to make a project pencil, you really need the concentration of headcount or herd count of dairy. But we have agricultural regions throughout the US, so you can sort of map out where are the large dairy clusters and then build from there.

Michael Crabb
Yeah, super interesting. Not a space I'm familiar with, but maybe one I need to start getting used to it sounds like.

Christine Lam
Yeah, I mean it's low- highly negative- very negative in terms of the carbon intensity score, on the lower end of the spectrum. I don't know if this reference will make any sense, but it can be as low as negative 300 utilizing the LCFS credit programs model. It's a lifecycle model from feedstock to tailpipe.

Michael Crabb
Super interesting. And then measurements of this is definitely a whole other topic. But we are running a little short on time. Not to end on cow manure... is there anything else that we that we haven't talked about or that you care to elaborate on before we before we close?

Christine Lam
No, I guess- well, maybe the last thing that I'll say going back to the future, I think the- and the big thing that I always think about is having the opportunity to discuss the different applications of the different tools that we have at hand. I think there is a lot of focus on fossil fuels, but natural gas will likely play a really important part of providing new power. And economically, we need reliable power. So being able to have those open conversations about natural gas, fossil fuel, I think is really important. It's exciting to see all the new technologies, because if you look at the greenhouse gas emissions per MMBtu of the different fuels, the highest you have coal, diesel, gasoline, propane, then natural gas, and there's like a huge gap and then renewables. I think that with CCUS, natural gas ends up moving a lot closer, if not down where the renewables are. One of the one of my big concerns always is the unintended consequences of actions and this rash decision making and that itself provides for opportunity. But I think, where we are today, being able to evaluate and really look holistically at how different options can work together makes a really huge difference. And what I'm excited about is where we are today. It's global momentum. Everyone is committed. And I guess even just a couple days ago, China made a new announcement. And anytime China commits to something, they end up pushing it forward, just based on how the government is set up. But that's exciting for the environment and everything that we're working towards.

Michael Crabb
I love all that. I definitely feel like this idea of cost competitive renewables in some parts of the world really works, but in large parts, glosses over the reliability issues and how critical that is for infrastructure, particularly developing countries, because it is a global issue.

Christine Lam
Right, yes.

Michael Crabb
It's really great. I wish we had another hour, because I love diving into that topic, but I'll leave it at that. It was a great close. I really appreciate you coming on and looking forward to further conversations.

Christine Lam
Yeah, thank you. Thanks for having me. This was this was a lot of fun.

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