Jonathan Goldberg - Capturing Carbon - [Founder’s Field Guide, EP. 25]

At a Glance

Jonathan Goldberg is the founder and CEO of Carbon Direct, a former Goldman Sachs commodity trader, and the founder of the hedge fund BBL Commodities. The core theme of this episode: the carbon problem requires addressing both the stock (1.6 trillion tons) and the flow (40 billion tons per year). Carbon removal technologies—especially direct air capture—are the key to the future, but current scale is nearly zero. The most weighty judgment in the entire episode: we need to build a "reverse oil industry"—an industry that removes 10 billion tons of CO₂ annually, twice the size of the existing oil and gas industry, and it must start now (Jonathan Goldberg).

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Theme 1: The "Stock vs. Flow" Problem of Carbon — The Overlooked Core Contradiction

Jonathan Goldberg argues that public and policy discussions focus excessively on "flow" (annual emissions) while ignoring the more critical "stock" issue.

• Data chain: The atmosphere already contains approximately 1.6 trillion tons of CO₂ stock, with an annual addition of about 40 billion tons in flow. Even if annual emissions were reduced to zero, the accumulated stock would continue to impact the climate. "The stock issue is not mentioned at all in the conversation, even though science clearly indicates it needs to be addressed."
• Mechanism breakdown: Commodities are a "stock + flow" hybrid — you need an actual barrel of oil or a bushel of corn, and inventory (stock) is crucial. The carbon problem is more extreme: the stock is 40 times the flow.
• Extrapolation: IPCC models assume the need to remove 10 billion tons of CO₂ (10 gigatons) annually by 2050, with accelerated growth starting from 2030. Today, that figure is nearly zero. For comparison, the entire energy industry transports only about 5 billion tons of materials annually. "We need to build an anti-oil industry, twice the size of the existing oil and gas sector."

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Theme 2: Emissions Source Panorama — Heavy Industry Is the Overlooked "Elephant"

Goldberg points out that heavy industry (cement, steel, etc.) is the largest and hardest-to-decarbonize source of emissions, with emissions exceeding the combined total of all cars, trucks, and aircraft worldwide.

• Emissions Structure:

Emissions Source	Share	Key Characteristics
Heavy Industry	~22%	Minimal innovation, decarbonization technologies far from mature
Transportation	Includes cars/aviation/trucks	Electric vehicles making progress but replacement of existing fleet extremely slow
Agriculture and Land Use	Significant	Natural carbon sinks may reverse and release CO₂ due to climate change
Power Sector	The final major block	Solar costs declining significantly, most optimistic outlook

• Historical Context: Since the release of the documentary An Inconvenient Truth, half of all emissions since the industrial era have occurred afterward — "we haven't learned much from it."
• Falsification Condition: Even if electric vehicle penetration follows an optimistic growth curve, due to the massive existing vehicle fleet and its long lifespan, the transportation sector still cannot meet the Paris Agreement targets.

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Theme 3: Carbon Removal Technologies — Natural vs. Engineered, Both Are Needed but Each Has Limitations

Goldberg emphasizes a "portfolio" strategy: natural solutions (reforestation, soil) and engineered solutions (direct air capture) must proceed in parallel, but each has fundamental constraints.

• Natural Solutions:
• Include reforestation, improved forest management, soil carbon sinks, and ocean-based approaches (e.g., seaweed)
• Currently account for the vast majority of carbon removal
• Key limitations: limited land availability, measurement difficulties, and non-permanent carbon storage (CO₂ is released back into the atmosphere when trees die)
• The "trillion trees" initiative is "crazy and completely unscientific" — there is simply not enough land globally
• Maximum potential is approximately 1 billion tons per year (1 gigaton)

• Engineered Solutions — Direct Air Capture (DAC):
• The technology has a history of over 70 years and is essentially open-source (David Keith publicly disclosed the design 10 years ago)
• Principle: giant fans combined with sorbent materials separate CO₂ from the air, which is then compressed and injected into underground geological storage (with approximately 20 trillion tons of available storage capacity globally)
• Advantages: theoretically infinitely scalable, can be built anywhere with access to renewable electricity and storage conditions
• Disadvantages: currently expensive, long construction timelines (a million-ton facility takes 3.5–4 years)
• Key constraint: cannot "usurp" renewable electricity — if DAC consumes all green power while coal plants continue operating, there is no net carbon benefit

• Projection: by 2050, 10 billion tons of annual carbon removal will be needed; natural solutions can contribute at most 1 billion tons, so DAC must reach a "gigaton scale" — but the time window is extremely tight.

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Theme 4: Incentives and Markets — No Carbon Price, No DAC

Goldberg states bluntly that in a world of "free emissions," direct air capture makes no economic sense — it must be driven by policy or voluntary corporate demand.

• Mechanism Breakdown: The laws of thermodynamics dictate that capturing CO₂ from point sources (such as power plant smokestacks) or extracting CO₂ directly from underground will always be cheaper than capturing it from the atmosphere. DAC is only viable under the following conditions:

1. Carbon Tax/Carbon Price: The EU ETS carbon price is approximately 33 euros per ton, and Canada has announced a tiered carbon tax that will rise to 175 dollars per ton — at which point it will exceed the cost of DAC.

2. Voluntary Corporate Commitments: For example, Microsoft's pledge for "carbon-negative" operations, Shopify, and others.

3. Circular Economy: Converting CO₂ into useful products (polymers, carbon monoxide, etc.).

• Data Chain: Carbon Direct's client base has an annual carbon footprint of approximately 650 million tons (equivalent to the size of Germany), but "if someone is betting that these voluntary commitments will solve the problem, that is a bad bet — the scale is far from sufficient."

• "Villain Test": If purely for profit, Goldberg believes the most promising opportunities are:
• CO₂ storage infrastructure (pipelines, storage assets)
• Converting CO₂ into carbon monoxide (a 100 billion dollar per year polymer market)
• However, converting CO₂ into fuel "will not be cost-competitive in the foreseeable future."

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Theme 5: The Fossil Fuel Paradox — Markets Are "Decarbonizing," but Actual Usage Continues to Rise

Goldberg points to a severe disconnect between the "decarbonization" of financial markets (energy sector weighting dropping from 12–13% to 1–2%) and actual emissions.

• Key analogy: "A friend owns a collection of luxury cars. To be environmentally friendly, he sells them all — but the buyers will keep driving them. Net emissions haven't declined."
• Data chain: Global oil demand in 2021 is expected to be higher than in 2019 (approximately 100 million barrels per day), with strong demand for petrochemical products. While aviation fuel may be structurally impaired, total volumes remain high.
• Market-implied carbon tax: Based on differences in the cost of capital, the financing cost gap between clean energy and fossil fuels equates to an implied carbon tax of $80–100 per ton.
• Consumer reality: Testing by Goldberg's large clients (major consumer goods companies) reveals that consumers' willingness to pay a "green premium" is zero — "not a little, but absolutely zero."

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Theme 6: Regulation and Geopolitics – Europe Leads, the U.S. May Follow

Goldberg argues that global carbon pricing is advancing in a fragmented manner, with the lack of a unified standard being the biggest obstacle.

• Country Positions:

Region	Carbon Price/Policy	Assessment
Europe + Canada	EU ETS at €33/ton; Canada’s tiered carbon tax up to $175/ton	"In a league of their own"
China	Announced net-zero target	Will follow if profitable (solar, EVs), but has a poor track record on carbon removal commitments
United States	No federal carbon price, but state-level policies such as California’s LCFS	Optimistic in 2021, with signs of bipartisan support for innovation

• Global Status: There are 170 different carbon taxes worldwide; unification would greatly improve efficiency.
• Key Recommendation: Policy should focus on the "levelized cost of carbon abatement" rather than blanket subsidies—EV subsidies can reach $500/ton, making them highly inefficient.

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Mentioned Positions

Position	Analyst Stance	Key Data
Microsoft	Positive Case	Committed to carbon-negative emissions, procuring a combination of DAC and natural solutions
Shopify	Positive Case	Client, adopting a portfolio strategy
Carbon Engineering	Technical Reference	Construction timeline for a million-tonne DAC plant is 3.5–4 years
Lafarge	Potential Client	May pay for point-source capture
Tesla	Neutral/Risk Note	Electric vehicle progress is solid, but the transportation sector still cannot meet Paris Agreement targets

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Judgments Worth Remembering

1. "We need to build an anti-oil industry" (Jonathan Goldberg) — An industry that removes 10 billion tons of CO₂ annually, twice the size of the existing oil and gas industry, and must start now. Today it is nearly zero.

2. "If someone bets that voluntary commitments will solve the problem, that is a bad bet" (Jonathan Goldberg) — The voluntary corporate carbon market is heading in the right direction but is far from sufficient in scale; mandatory policies such as carbon taxes are needed.

3. "Consumers' willingness to pay for a green premium is zero" (Jonathan Goldberg) — Large consumer goods companies' tests are clear: clean products must cost the same or less, otherwise they cannot scale.

4. "The trillion-tree plan is crazy and has no scientific basis at all" (Jonathan Goldberg) — The maximum potential of natural solutions (tree planting, soil) is about 1 billion tons per year, and carbon storage is not permanent; DAC is theoretically infinitely scalable but expensive.

5. "Since 'An Inconvenient Truth,' half of industrial-era emissions have occurred afterward" (Jonathan Goldberg) — A warning: awareness does not equal action, and emissions are still accelerating.

6. "The implicit carbon tax in financial markets is about $80-100 per ton" (Jonathan Goldberg) — Calculated from the difference in capital costs between clean and fossil energy, the market is already pricing carbon risk, but actual emissions have not declined.

7. "DAC only makes no sense in a world of free emissions" (Jonathan Goldberg) — Thermodynamics dictate that point-source capture will always be cheaper; it must be driven by carbon prices or corporate demand.

8. "Policy should focus on the cost per ton of carbon reduction, not blanket subsidies" (Jonathan Goldberg) — Electric vehicle subsidies can reach $500 per ton, which is highly inefficient; limited budgets should be directed toward the most effective emission reduction pathways.