Chart Industries, Inc. (GTLS) Earnings Call Transcript & Summary

Good morning, and welcome to the Chart Industries, Inc., Carbon Capture Expansion Conference Call. [Operator Instructions] A telephone replay of today's broadcast will be available following the conclusion of the call until Tuesday, February 9, 2021. The replay information is contained in the company's press release. Before we begin, the company would like to remind you that statements made during this call, that are not historical in fact, are forward-looking statements. Please refer to the information regarding forward-looking statements and risk factors included in the company's latest SEC filings. The company undertakes no obligation to update publicly or revise any forward-looking statement. I would now like to turn the conference over to Jill Evanko, Chart Industries' CEO.

Thanks, Josh. Good morning, everyone, and thanks for joining on short notice for a discussion on our exciting investment in another carbon capture company, Svante. Yes today is February 2, Groundhog Day. So in keeping with the spirit, you'll hear us beat the same drum of making investments that bring us more market share, new customers and multiple options in what will certainly be a hybrid of solutions in the high-growth areas of specialty markets, today, in particular, carbon capture for the clean energy, [Technical Difficulty] food and industrial nexuses. There isn't going to be only one source of power or one way to store it or to use it. So he or, in our case, she, who has the broadest set of equipment and process for all of the possibilities in the hybrid of solutions to the need for clean, will be best positioned. And that's what we continue to build out a broad offering that is molecule agnostic and can be chosen as a full solution or as an ala carte menu. Svante offers companies in emissions intensive industries a commercially viable way to capture large scale CO2 emissions from existing infrastructure, either for safe storage or to be recycled for further industrial use in a closed loop. Svante provides the ability to capture CO2 directly from industrial sources at less than half the capital cost of first-generation solutions. And a fun fact, Svante is named after Nobel laureate, Svante Arrhenius, one of the first scientists to identify the atmosphere-carbon climate change connection. This morning, we closed on a USD 15 million investment in Svante as part of their Series D offering. This gives us just under 10% ownership of the company, but more importantly, it brings us another option in our portfolio of growing carbon capture technology, equipment and solutions. First, it adds another option for our customers to choose from when deciding what solution they want to go with and further acquires a carbon capture market by giving us access to projects and blue-chip customers that have already committed to them. And second, or rather, additionally, there is either further optimization potential in combination with our recent acquisition of SES to create a high-powered combination of low CapEx costs with the highest purity, 2 key needs of CCUS customers. This investment in a Canadian company builds upon our Canadian clean energy network, which got a jump-start with our December 2020 HTEC investment, as shown on Slide 3 of the supplemental presentation. As a reminder, HTEC is also Vancouver headquartered and designed to build and operate hydrogen fuel supply solutions to support the deployment of hydrogen fuel cell electric vehicles. So now with access to HTEC, which has significant hydrogen contracts for numerous projects across the country, and Svante with numerous North American carbon capture opportunities, we are well-positioned to have content on the project opportunities in this region that come from either company, in particular, with SMR Blue Hydrogen. Our strategy is to continue to have the broadest product and technology offering for energy and industrial gas applications, and we expect the clean energy transition and destination to be a hybrid of multiple molecules and solutions. What sets us apart at Chart, we are molecule agnostic and have equipment and solutions that address LNG, CNG, hydrogen, biogas, carbon capture, water, just to name a few. So today, we continue to build on that strategy. With this and other recent investments, plus what is commercially happening in the market lately, I'm finally breaking down. For those of you who keep asking why I won't say specialty is going to grow more than 10%, well, today, I'll tell you that our expectation is that our Specialty Products segment sales will grow over 20% in 2021. Now you're going to have to wait for another couple of weeks until our February 18th earnings call to get into the nitty-gritty on how that is built up. And I promise you, we will share details at that point. And as with all of our investments and acquisitions, Svante checks the box of our 2 key investment elements, which are that it brings Chart, first, customers and commercial projects that could not be accessed without significant organic investment; and second, geographies that otherwise could not readily be accessed due to lack of product experience in the region, certification requirements or government funding and relationships. Sustainability is the overarching macro trend driving interest and investment in clean energy, water, food and industrials. As you can see on Slide 4, we are well-positioned to take advantage of those connections, which are becoming more and more prominent. There is a direct link between carbon capture and industrial manufacturing, clean power linked to clean industrial. Heavy industry is responsible for over 20% of global emissions. And 70% of the emissions in China, Europe and the United States are within 100 kilometers of potential storage sites. And let's not forget the macro trend of sustainability is supported by government and private dollars, evidenced by just to name a few examples, the Low Carbon Fuel Standard, or LCFS, which is perhaps the most prominent program to reduce carbon in fuels and support the hydrogen refueling infrastructure credit; and the 45Q, which provides tax credit to company that sequesters CO2 through geological sequestration, EOR, or Enhanced Oil Recovery, chemical or biological sequestration. But possibly, more people started to pay attention to carbon capture when Elon Musk tweeted his $100 million prize for the best carbon capture technology about 2 weeks ago. Slide 5 provides an overview of what carbon capture is and does. In a few moments, I'll go into the differences of the types of capture and the content for Chart equipment, SES and Svante technologies, both together and separate. Slide 6 is meant to remind everyone about the extensive value chain of carbon dioxide that our existing equipment is heavily used in. Piggybacking to point I just made around heavy industry, other industries and applications use CO2. Our equipment is used for carbon dioxide and food and beverage, all the way through to cannabis and dry ice for vaccine storage and firefighting. The common denominator here is the equipment to store CO2. These applications will require CO2. And this past year, the market saw a CO2 shortage. Another way to think about carbon capture, not just around clean energy, but rather around an economical way to address a growing need in the everyday applications [Technical Difficulty]. It is important to understand the types of carbon and air capture processes to understand which ones will be used where. So moving to Slide 7. Post-combustion CO2 capture processes can use a cryogenic process that delivers high-purity liquid CO2 ready for use or amine processes that deliver gaseous CO2. These are referred to generally as carbon capture processes and are typically used when capturing CO2 from existing assets that are currently emitting carbon dioxide into the air. Chart equipment and focus here on equipment alone, not technology or process. For cryogenic process, which both SES and Svante are, comprises between 15% and 20% of the total plant cost. So that's equipment alone. It is noteworthy that our total equipment and process content significantly increases when technology is involved. In a demonstration size project, which is somewhere between 10 and 30 tons per day, our equipment content could be approximately $5 million to $7 million per project. Adding a process to that, in many cases, would make our total content 3x to 4x that. And this is the case, whether it's Svante, SES or the potential combination thereof. Now in amine processes, air-cooled heat exchangers represent the majority of the plant and represent 20% to 25% of the total cost of a project. The second type of capture is direct air capture. This removes carbon dioxide directly from the atmosphere, and depending on which process technology is applied, air removers, similar to our air coolers, is the most significant portion of project cost, approximately 50%. Both SES and Svante's processes either separately or combined can be used in direct air capture. Before we get into any specifics, a little history about Svante is on Slide 8. Established in 2007, Svante has 80 employees, includes CEO -- including CEO, Claude Letourneau. As with all inorganic investments that we do, we only want to be involved with stellar management teams and leaderships. And I can tell you that it's exactly what Claude is. He's an industrial project veteran who brings to Svante a broad range of experience, leading large world-class projects. Claude's 30 years of experience in advanced technology development and commercialization gives us high confidence that the company will be a global leader in building a CO2 marketplace. Like hydrogen and other clean options, economics are important for carbon capture and CCUS. So the technology and equipment has to do its job in as small a footprint as possible with as lowest cost as possible, all while ensuring the highest purity CO2 for commercial sale. Svante brings a unique demonstrated and proven solution to the market with a solid assortment that is over 50% less capital intensive than first generation amine options. We love both the Svante and SES technologies as they fall into the post-combustion CO2 process category as well as offering 2 very good solutions for direct air capture, again, leveraging our ala carte menu of choices for the clean energy transition. Efficiency and purity of the SES CCC process that we talked about in December compared to traditional amines is a differentiator. While the low-cost CapEx of Svante sorbent beds compared to traditional solutions is another differentiator. Put the best of both together plus Chart equipment, and we think it can be quite a combination upon joint development, which is part of our plan. Alternatively, each can be an answer on its own. And like I've said previously, there won't be just 1 solution. So having a broad menu of options is a key part of our strategy. So how do we continue to stay differentiated, intellectual property. Slide 10 shows a few new stats for you and also the highly differentiated nature of our various involvement in carbon capture. First, at Chart, 82% of our existing equipment and solutions have IP associated with them. SES' 61 patents plus another 20 patents pending between the founders, Andy and Larry Baxter, who remain with Chart to continue to innovate. And finally, through our investment and MOU, Chart and Svante, which, by the way, has over 130 patents worldwide, now have a joint development agreement. One of the things I really like about Svante's approach is that they are being pragmatic about how to get the ball rolling on projects versus looking at the greenest and cleanest. Their commercial focus, as shown on Slide 11, is on 3 areas that have a current need to address CO2. Basically, let's address an existing problem with existing assets versus starting from scratch. Hence, you get natural gas, SMR Blue Hydrogen and Cement as target industrial markets. These 3 areas alone already have 27 potential commercial opportunities for Svante across 16 individual customers with expected shovel-ready work between now and 2025. Just with these alone, there is opportunity to achieve a significant portion of our $600 million addressable market for carbon capture. Couple that with SES and Chart pipelines that each respectively bring to the table and market penetration becomes deeper, faster. As a reminder, Chart pre-SES acquisition and pre-Svante investment is currently bidding on over 20 projects globally for CCUS equipment. One example of Svante in action is shown on Slide 12, where a 30-ton-per-day plant has been operating at Husky Energy in Canada since 2019. Also achieved by Svante already are the CO2 meant project at Lafarge in Richmond, British Columbia, capturing 1 ton per day for its use in building materials. A laboratory testing unit of 100 kilograms per day installed at Total SA R&D Center in France, just a couple of examples. Also worth noting is that the U.S. Department of Energy awarded funding support to Chevron to deploy a 25-ton-per-day demo plant at Chevron's oilfield in San Joaquin Valley in California. It is also worth noting that there are additional committed projects in the pipeline for Svante, which are shown on the bottom right-hand side of the slide, including a large-scale facility in Colorado. We are pleased to participate on these upcoming projects as an aspect of the commercial MOU. So turning to Slide 13 to discuss that. In line with how we like to achieve commercial penetration, we're very pleased to announce our commercial MOU with Svante that was signed in conjunction with our investment. You can see the benefits of this commercial agreement on the slide, and we also are pleased to join other Svante shareholders and partners that give us opportunity to penetrate existing facilities with our equipment as well as build commercial relationships for other applications that these parties work on, not necessarily only in carbon capture. And as we commented about HTEC on the hydrogen side, direct linkage and communication with government policymakers is a great benefit that comes from both HTEC and Svante in Canada. We continue to stay focused on our balance sheet by executing on strong cash flow generation as well as increasing earnings while playing Pacman and gobbling up strategic investments that fit naturally into our high-growth spaces. Our position on maintaining low net leverage ratio, i.e., sub 2x is unchanged. And as you can see on Slide 14, our year-end 2020 net leverage ratio is reported at 1.70, down from 1.97 at the end of November 2020, when including the pro forma December spend for SES and HTEC. The significant debt paydown is in part the result of the fourth quarter of 2020 being our second highest free cash flow quarter in the history of our business with or without big LNG. When you pro forma December 31 for the Svante investment, the net leverage ratio is 1.77. Given the complementary nature of our existing carbon capture and Svante, what we expect to be able to do combine, we are increasingly confident in achieving a significant portion of our total addressable market for carbon and direct air capture of $600 million in the near term, as shown on Slide 15. So I wanted to pick and choose a few data points to whet your appetite for our upcoming earnings call. And if Slide 14 and our net leverage ratio didn't do it, let's hope Slide 16 and record backlog as of December 31, 2020 does. We'll share detailed order activity from the fourth quarter of 2020 in a couple of weeks. But in the meantime, a few data points for you. Full-year 2020 Specialty Market orders were a record. This contributed to the record Specialty products backlog, which also included record backlogs in HLNG vehicle tanks, hydrogen, water treatment and food and beverage. Food & Beverage was a sleeper surprise given the drastic slowdown in the second quarter of 2020 due to COVID. The former distribution and storage segments, both East and West, had stellar second halves of 2020 from an order perspective, contributing to records for each as well as record cryo tank solution backlog. I'm certain you noted the comment in the press release about anticipating an increase to our 2020 outlook on our earnings call. I would have been remiss not to have included that today, as I'm certain many of you would have asked. So yes, there will be a change to guidance, but don't intend to update your models before we share the full year 2020 results or you might cause me to resegment again. Before I open it up to questions, there are 3 key takeaways from this and our other recent organic and inorganic investments. These 3 takeaways are the exact same ones I said on our December acquisition update call, but they deserve repeating. First, we have no peers. Our extremely unique and differentiated equipment and technology offering touches all of the inter-linkages between clean energy, water, food and industrials. Second, we are staying with our strategy of expanding our high-growth, high-margin, clean energy, specialty markets and repair, service and leasing businesses through technology, commercial and geographic investments. There isn't going to be one source of power or one way to store it or to use it. So as I mentioned in my opening remarks, he or she who has the broadest set of equipment and process for all of the possibilities in what will certainly be a hybrid answer to the need for clean will be best positioned and that's what we will continue to build out. A broad offering that is molecule agnostic and can be chosen as a full solution or as an a la carte menu. And third, carbon neutrality targets cannot be achieved without carbon capture projects, and the most optimized project will take advantage of the combination of energy, water, industrial and storage. I'll now turn it over to Josh for Q&A. But please note, there is an additional quick announcement I will make post Q&A, so please stay on if possible. Josh, back to you.

[Operator Instructions] Our first question comes from Eric Stine with Craig-Hallum.

So I know in the release and also here on the call you mentioned some of these pilot projects with Total and Chevron. Just digging into this a little bit, it looks like there's also a pretty sizable direct air capture project in Palm Springs. I know this is an area that you have certainly been focused on as this market is starting to come together. So maybe just talk about that, maybe that specific project, but also that application and what you see for that going forward?

Absolutely. Yes, direct air capture is an area in addition to the post-combustion carbon capture that our equipment is just a very natural fit for. So like anything else, we love when the equipment is a key part of the project, but also gives us a unique advantage where we have the smallest size so we can fit on smaller plots, et cetera. So we really love what Svante is doing in this area. And if you look at direct air capture for Chart equipment, these are heavily around large banks of air movers, similar to the air-cooled heat exchanger. And this can be, as I commented, up to 50% of the total project cost. So we're continuing that pipeline out. We're working on multiple different projects on the direct air capture side. And Svante just brings us access to multiple more options and their relationships on the direct air side, expand that commercial penetration for us beyond what was in our pipeline originally.

Got it. And then -- I mean, just curious, what -- I know it's early here, but I'm sure you've had some interaction with some of these companies who -- I mean, Total, Chevron, others, who are your current customers, maybe in other parts of your business. Any feedback you can share from them?

Definitely, we -- as you know, because you've been around us a long time, Eric, that we talk with these customers on a very regular basis. And it's really important to us to kind of be their one-stop shop for whatever molecule that they're working on at any given time because they all have multiple facets happening, not just 1 particular play. And the discussions that we've had with these customers has been very, very positive. They see carbon capture as a very important part of how they're going to solve their carbon neutrality targets. And they don't -- in many cases, they don't actually have a solution, and so having the partnerships is really important to them. And they view Chart as a key part of those partnerships. And that's primarily, I think, because you get the combination of the process and the equipment is what we hear. So overall, very positive feedback and their experience with Svante so far has been extremely positive. We've heard no negative market feedback, which was very important to us as well.

Our next question comes from Ian MacPherson with Simmons.

Congratulations. I wanted to ask a little bit probably around the pipeline of projects. I think you said there are about 20 projects that you're bidding presently. I presume that's predominantly, is it entirely North America? And then are they 25 million to 30 million ton projects? Is that indicative of what a big project looks like to anticipate that scaling larger or maybe a larger subset of projects that are smaller? Just kind of want to get a better sense of the nature of that bid pipeline.

Absolutely, Ian. So the first part of your question, our pipeline pre-SES or pre-Svante was the 20 there, and it's about 2/3 North American and a 1/3 EMEA region. And if you tack on the Svante potential pipeline in the next 5 years, you're looking at those shovel readies in that time period, somewhere between 25 and 30 different projects, of which 7 of those would be non-North American. But I would caveat that comment in the talking point I had during the prepared remarks focused on that low CapEx cost solution. And that's really important to the Svante advantage and that's very targeted to North America in terms of the economics that come into play there. The economics are different in Europe and EMEA, and that's really around whether you can store underground or not. So there's different factors in play regionally. And I think that those will be further enhanced by our product offering in Europe given some of the work that we're doing with our equipment on the heat exchanger side to have the smallest footprint for plot size. So there's quite a lot of nuances to these answers, I apologize for that. But generally speaking, you can say, kind of 60% North American, 40% non across the combined investment in organic pipeline that we have. In terms of the size of the projects, 20 to 30 tons per day is really -- I would consider that small scale or demonstration size, and that's what's happening to really prove the concept out, and you're seeing that in various different locations as evidenced by some of the work that's already out there. In that 20 to 30 ton per day, these projects can be somewhere in the $15 million to $50 million price tag range. But very quickly, these are going to scale up to be larger. And when I say larger, we're talking thousands of ton per day type of applications, and that's really to handle the industrial side, the cement and the natural gas. So what I would consider a large-scale is in that range. And on the SMR Blue Hydrogen side, at the small end, it's kind of 400 to 800 TPD and at the high end in the 2,000. When you start getting in the thousands, now you're in the hundreds and hundreds of millions of dollars for a project. So a few thousand ton per day project is somewhere in the $300 million to $400 million range.

Okay. That's super helpful. So now with this investment complete, how do you assess your toolbox for carbon capture? Are there more parts of the solution that you would like to add inorganically? Or do you feel like you're well-positioned now for that end market?

We feel like we're very, very well-positioned on carbon capture now. This was a key piece of the puzzle that we had, had in our sights for a while. So we have a really strong combination between owning the SES, having the investment in Svante and our equipment profile. So there's not any particular other one that we absolutely must go and get. And we also continue to see the optimization with this joint development that we're working on, will further differentiate our offering on carbon capture. So there's other clean investments out there that would work very nicely in linkage that we see of carbon capture with industrialization and water, in particular, and link all of that with, whether you want to pick, hydrogen or LNG or biogas. So this inter-linkage concept is not going away, but our toolkit on carbon capture specifically is very full.

Our next question comes from Rob Brown with Lake Street Capital.

Just following up on that -- on the last question. What's sort of your view on the timeline of moving from demo projects to larger industrial scale projects? What does that look like at this point? And any other -- any sort of gating items to getting that transition started?

I think the large-scale projects will be commercially happening in about 3 years. So I think we still have a couple more years of the demonstration projects. Although I would put a specific caveat to that, that there is going to be more and more demonstration projects. So you can still handle multiples of those in this next couple of years as the scale-up happens for the larger projects. And, yes, it's really around understanding what the customer wants. So the comment that I made about a lot of confidence in Svante building the CO2 marketplace is an important one. So you've got solution on the low CapEx cost, you have development around ensuring that you have the highest purity for commercial use CO2 and then you have the parties and the end-users in this marketplace that now have been coupled up. And what I mean by that is you've got the equipment providers, you have the technology providers, you have the end-users that want to solve their problem. And now it's really about getting the equipment made, getting the facility ready, getting the location ready and then doing your proof-of-concept testing and so on. But I think it's a near-term move to large scale.

Okay. Great. And then what's the competitive environment at this point in the carbon capture market with these 2 technologies sort of teamed up with you? What's the competitive environment look like?

We are very well-positioned in the competitive environment for, I would say, 3 different reasons. The first is, you have to have highly efficient low CapEx and high purity as a solution for this to be economically viable for your end-users, and that combination is something that we have now. If you compare it to kind of first-generation and/or traditional amine solutions, that's really the competition to the cryogenic carbon capture side of things. And in case of Svante, you're talking about solid sorbents versus liquid, and that's a lot around that CapEx cost. In the case of Chart equipment, we can handle either. So we're really well-positioned to take on whatever a customer/end-user is looking to do. The other thing I'd say that is probably a differentiator to us, the second is the fact that we, amongst our investments, ownership and equipment, have experience in this. And Svante is example of that I briefly listed and didn't even give the full resume that having a demonstration plan that's been operating and as you're able to take customers to is very similar to what you saw happen in small scale LNG, where you needed to have a showcase location for people to come and see and they -- most people don't want to be the first, right? They want -- they don't want to be the test guinea pig. And so having that out there and operating and showing the metrics and the efficiencies compared to other solutions is a considerable advantage to other companies that are in start-up mode or see kind of investments in these various different types of technologies, which all I'm certain will be competitive as this becomes much more commercially viable. But having an operating facility that's using the technology and equipment is a huge differentiator. And then third, literally, a lot of this goes to the commercial relationships and the parties involved and how they're viewing, where they've kind of placed their bets. And as you heard me talk about with Andy and Larry's SES business, they have decade-plus of experience with key stakeholders in carbon capture, ranging anywhere from the United States state, the governments to utility companies in Europe, and that's the same situation that we have with our investment in Svante, where they have blue-chip relationships and blue-chip customers that have placed their bets on, on their solution. So those 3 things give us a significant leg-up when you start looking at what the alternatives are.

Our next question comes from James West with Evercore ISI.

So we saw the announcement from Exxon last night, Chevron bought or into a carbon capture company a couple -- 2 weeks ago. It seems like we're hitting this inflection point for carbon capture. You guys have been at the forefront of this as you push forward with your organic and inorganic strategy here. I mean, would you -- do you believe this is -- we're in this kind of crescendo where CCUS is starting to really take off as the transition kind of accelerates here. I mean I know you talked about demonstration projects, but are we now in the phase where we're kind of, okay, we've got some demo projects here and there, but we're going to kick off some major projects here in the near-term as well?

I couldn't agree more with that comment, James. And I equate it to what we saw happen in April, May of 2020 for hydrogen. It was here and there, and you had to be a hydrogen kind of company or in the industry to have seen it happening a little bit ahead of time. But boom, it started happening and it happened fast and it went from these theoretical concepts and demonstration projects, which -- there's still some of that happening, right? So there's still that optimization solution. But actually, people buying stuff, right? I mean we saw a ton of equipment being sold for hydrogen, more than we ever had before in the second half. So [Technical Difficulty] carbon capture kind of where it sits right now to exactly that. So it's going to accelerate. It's going to happen quickly. Probably the best example I can give is while there's demonstration projects on the horizon and some of these commercial opportunities are exactly that in our pipeline, there's also a dozen that are large scale, and they already have site, right? And already have -- take a cement customer who has 100 sites in the U.S. and 1,000 sites in China and 250 in Europe, right? That's a real customer, and they've got all these sites, and they need to start addressing this particular issue. So I think just the sheer fact of they were looking at scoping on that size on literal locations gives you a sense that it's almost bursting through.

Right. Okay. That's what I thought. And so maybe a follow-up here. As the mix of the carbon capture, things that you're looking at, how much is related to hydrogen and blue hydrogen? How much is just sheer industrial we got to do something with this carbon and sequester it and put it into storage?

I'd say it's probably-ish due to my 60-40 again, 60 around industrial and the rest around kind of blue hydrogen. And I do think that while there's a lot of work happening on green hydrogen, there's a pragmatism that's starting to happen in the market that blue hydrogen is better than some traditional fossil fuels, and so let's start working with that.

Our next question comes from Martin Malloy with Johnson Rice.

On Slide 11, where it talks about the 13 projects with start-ups by 2025 on the natural gas side, can you maybe talk a little bit more about the type of projects there? Is this gas processing? Can this be applied to LNG, power?

Yes and yes to that on the natural gas side. And these projects would be ranging from EOR and sequestration to vented. So you're talking about that closed-loop versus releasing into the atmosphere and what you do with it that point. Most of the customers on the natural gas side -- potential customers on the natural gas side, I should say, are in traditional kind of oilfield service, and so they're looking at utilization of carbon capture to address emissions with existing assets.

So like on a gas processing type plant?

Correct. That's one example of a couple of them.

Okay. Okay. Great. And then maybe just from your relationships with the industrial gas customers, can you maybe give some anecdotes about their interest in this type of application on their facilities?

Yes. There's a growing interest in this application, some of which is the result of localized rules. So in the case of like a -- take New York City where there's commercial building requirements of what you can release into the atmosphere and I think that's going to become more and more prominent around cities across the globe. So you're starting to see more interest from industrials. And I wouldn't just narrow it to the industrial gas guys. I think the industrial gas customers are very, very well in tune with the options out there, and they're moving around cleaner answers. So they're certainly also at the forefront of this type of transition. But even industrial customers, even 6 months ago, you wouldn't have had a situation where a water treatment facility was looking at contemplating doing carbon capture adjacent to it. We constantly are talking with our customers that do concrete curing around CO2. And so this is becoming a much broader talked about. I still think there's that tipping point to get to action from some of them, and that's also the CO2 marketplace concept that Svante has of, hey, industrial guy, A, isn't really going to do this on his own. So how do we bring the parties together and have this be a full operating, efficient and ultimately economical solution for you to address this carbon emission reduction target that you have. So bringing the right parties to the table and demonstrating the economics is going to be a key part of having the pull versus the push.

Great. Congratulations on the announcement.

Thanks, Marty.

Our next question comes from Pavel Molchanov with Raymond James.

Since the last carbon capture call you guys hosted last fall, we had the 45Q tax credit extended in this country, but I have heard the criticism that $50 a ton is still on the low side as kind of necessary incentives go. I'm curious if you think 45Q is adequate, suited for purpose or if it still needs improvement?