Podcast: Tradewater’s Gabriel Plotkin on Carbon Credits, Destroying Refrigerants, and Climate Change

Highlights from the Conversation

Welcome! Before we get into your work with carbon credits, I’d love to hear more about you and your background—you’ve had a really interesting career journey.

• Thanks very much for having me on the podcast; I appreciate the opportunity. I started out as a lawyer, that was my calling right out of undergrad.
• I had a strong interest in helping kids, and found myself working with runaway and homeless teens in Milwaukee, Wisconsin. I was doing crisis intervention services for youth who found themselves in trouble, and I learned that one of the best ways to help them out was to get involved with law. I found that so many of these kids who were in a rough spot ended up in trouble with the juvenile justice system. That’s why I went into law school.
• While I was there I was thinking about the issues around youth, and took a class on race and justice and criminal law, which led to my role in Chicago as a public defender in federal court, representing indigent clients who were facing the full force of federal law. It was a natural progression from some of the work that I was doing with youth. I found it fascinating, interesting, and really, really hard.
• From there I made a transition within law to being a litigator, enjoying the skills I used in the courtroom. I joined a great little firm and did some interesting work there, but it didn’t really scratch that itch that I had for fulfilling work.
• After about 12 or 13 years I started to think that there has got to be something else out there that I could feel passionate about and get behind. That’s what led me to do climate change work.

Obviously, you’re a helper—starting with troubled youth and now with the environment. I’d love to hear more about what you learned on that journey. I know this was in your former life, but issues around troubled youth seem to come and go in terms of visibility.

• Sure. There are two pieces in there. Obviously there are a lot of very sad situations, like lack of resources, unstable families, addiction, and mental health.
• At the time I was in Madison, Wisconsin, which was a more welcoming place for youth from Milwaukee and Chicago. There was an understanding and a social safety net for youth and homeless people and so that really attracted these youth who would flee from the bigger cities.
• This great non-profit in Madison had a program that was designed to provide crisis intervention services. Ultimately, it’s about people who need help. And this organization provided a lot of that help, but it was temporary. At the time it seemed to me that law was the place to go to help keep these youth out of prison because often they would commit petty crimes because they needed food and a place to stay, but they weren’t criminals at heart.

Kudos to you for that, because that tells us a lot about your character as an amazing person. Let’s go ahead and talk about how you made that transition into sustainability.

• Thanks, I appreciate that. It’s important to me to believe in what I’m doing, and to be helping to solve a problem. I’m really motivated by that, and I have my grandparents to thank for that perspective.
• As I was practicing law and feeling like maybe I wasn’t having the impact that I wanted, I started to think about the things that I really cared about, and one of those things was the environment and climate change as one of the true challenges of our lifetime.
• While I was doing my law practice, I also began to get involved in organizations that I found very interesting. I started serving on the board of something called the Rebuilding Exchange in Chicago. I learned about them through my criminal defence work, because in addition to their environmental work, they were focused on providing job training for ex-offenders and getting them back into positive work.
• What the Rebuilding Exchange does is housing and building deconstruction, but instead of throwing everything into landfills, they were about diverting waste from landfill by taking apart buildings and creating a market for everything from lumber and bricks to sinks and kitchens and hardwood flooring.
• They were training ex-offenders to work in the showroom where they sold these goods, and to help do the deconstruction work itself.
• While I was serving on the board of that group, I met Tim Brown (CEO of Tradewater) who also served on the board of directors. Tim was in the environmental space from the beginning, he had formed a non-profit of his own called the Delta Institute, and had recently formed a company called Wabashco, which was focused on climate change and was doing some really interesting environmental projects.
• I really liked Tim, and at one point we were talking and I was explaining about some of the things I was interested in, and about how I was looking for interesting work in the environmental space. He said that there was an opportunity in the work he was doing with carbon offset credits and the California Cap-and-Trade Program, and asked, “What do you think about coming and working with me?”
• That’s what led Tim and I to start working together, and ultimately to found Tradewater.

Can you tell me more about the history of the company?

• Tradewater was formed in 2016, and we had our five-year anniversary earlier this year. It’s a big milestone.
• Tim had founded Wabashco around 2008, and they had been doing a number of really interesting environmental projects focused on whether the for-profit private sector could have greater impact with money than he had had in the not-for-profit space.
• Wabashco did some work with wind farms and coal mine methane and focused on the Chicago Climate Exchange, which at the time was a hoped-for catalyst for carbon projects. While that didn’t materialize, and we can get into what happened with that and the Obama administration, but they stumbled upon the California cap-and-trade market.
• They learned about what that program did and what projects that it allowed for, which included the destruction of old refrigerants. Wabashco developed a small project around that work, and felt that there was something there, and that it could form the anchor of a new business venture. That’s where I came in.

So this would have been around 2013-2014? If I remember correctly, we are at a point where a wave of enthusiasm around the environmental movement was flaming out. Now it’s becoming top of mind again, with organizations trying to come back better, smarter and faster. Tell me what you think about what was going on then, and how that contrasts with what’s going on now.

• I don’t know if I’m necessarily the best person to explain everything, as this is the second phase of my career, now that we’re on the upswing that you mentioned.
• From what I know there were a number of projects at that time, like the European Union’s emissions trading scheme, which put a cap-and-trade program in place and allowed for some offset credits. My understanding is that it was a really great attempt that didn’t work because the supply and demand was mismatched. They ended up with lots of offset credits, improper pricing of carbon, and it really didn’t lead to the robust program to drive down emissions that people had hoped for.
• I know that at the Chicago Climate Exchange there was an effort to get in front of this with the hope that there would either be a national carbon tax or cap-and-trade program. The latter was something the Obama administration was interested in doing, and there were efforts going on to lay the foundation from that. But as I understand it, choices had to be made on the political side, and health care was the path that was chosen to move forward—although health care is also an important topic. Unfortunately the fight against climate change was set aside.
• What I can say is that, at least from the perspective of the Tradewater story, the work that California did was key. Instead of looking at a national regime or even an international regime, California (under Governor Arnold Schwarzenegger) enacted their Global Warming Solutions Act in 2006. That created a regional program to focus on climate change in California, and what California could do to drive down their emissions as the sixth largest economy in the world. Even then they were seeing the effects of things like coastal erosion and fires, and they wanted to get ahead of this.
• This program, and others, really put us on a course to do this right. We learned from the EU system how to price it, and how to set up allowances and offset credits in a way that would really make this work to drive down emissions and create economic opportunity. We were born out of that piece of legislation.

How did you decide to focus on refrigerants?

• So as California decided to cap emissions and reduce emissions over time, and make some of the largest emitters pay for those emissions, they also created an offset program that was built in. They identified some of the specific offset projects that people could do and sell some of the resulting credits in the California market.
• One of those was the collection and destruction of ozone-depleting substances, basically old refrigerants which also happen to be some of the most powerful greenhouse gases—the nastiest gases that we have ever created. Some are ten thousand times more potent than carbon dioxide.
• California set out a number of protocols, one of which was to collect and destroy these old chlorofluorocarbon (CFC) refrigerants as an environmental benefit. No one else was doing that at the time, and what was happening was that they were leaking into the atmosphere.
• Under the rules, if we collected and destroyed these old refrigerants, we could sell the credits on the market, where emitting entities could purchase credits as part of their compliance obligations.

We know that these old refrigerants are still out there in old air conditioning systems, cars, building HVAC systems, etc.. Your goal is to find them, get them, and destroy them before the gases get out into the atmosphere. It’s very surgical, very practical, and very real. Did you choose refrigerants because they’re more tangible than some of the more abstract or complex carbon initiatives? Are you looking at any other related sustainability efforts?

• We are focused on refrigerants first and foremost. Part of the great thing about these refrigerants is that the work is incredibly tangible. You can literally put your hands on a cylinder of refrigerant, many weigh about 30 pounds and look like a propane tank that you would use for a backyard grill.
• We literally travel the world finding those wherever they are, often in garages and basements and auto shops and places like that. We transport them, and then we safely destroy them. There is nothing more tangible than having a car full of greenhouse gases that you know are going to get destroyed.
• As you pointed out, it is a huge problem. Project Drawdown says that this is one of the top things that we can do to prevent catastrophic climate change. MIT has reported that there are nine billion tons of carbon dioxide (CO2) equivalent just from CFCs alone. That’s a global number.
• There are different classes of refrigerants, and CFCs are the oldest. We’re now three generations later, so there are also all the newer refrigerants out there too.
• In terms of other project types where we have found ourselves focused on refrigerants first but also on non-CO2 gases. The recent International Panel on Climate Change (IPCC) report came out over the summer, and includes the findings from a number of scientists who are looking at all the research and pulling it together to say how we are doing in the fight against climate change. Basically, the report says that we’re not doing so good.
• One of the things that they say is that we need to be focused on these non-CO2 gases like refrigerants and methane. They’re not CO2 but they are potent greenhouse gases that tend to be short-lived climate pollutants. They’re out in the atmosphere for an intense few years but they raise the temperature in those years even more than carbon dioxide, which stays in the atmosphere much longer.
• The report says that if we really want to avoid that tipping point, at which climate change becomes a runaway problem, we have got to get to these non-CO2 gases right now, before they’re released. That will give us some more time to fight our overall carbon dioxide emissions.
• So Tradewater is interested in projects around methane and old abandoned coal mines and abandoned oil and gas wells. People focus a lot on the methane that comes from livestock, which is a big issue that others are working on. But fossil fuels like coal also release methane.
• We did a project early on for the California market that involved an abandoned coal mine in Western Kentucky. What we learned is that not only are these projects bad for the environment because you’re bringing fossil fuels out of the earth, but there is very limited or lax enforcement about cleanup at the end of the day.
• So what happens after the mining has stopped and you’re left with a hole in the ground with leftover coal that continues to leak methane. You can walk around fields in Western Kentucky and see pipes sticking out of the ground that are vents left over from mines. You can use a sniffer to detect the methane coming out of them. There’s no obligation to close those up. Oil and gas wells have the same kind of thing, in which they continue to leak methane. They’re abandoned because the company has moved on, or sometimes has gone bankrupt, and the state takes over, and they’re just sitting there leaking methane. It’s a big problem.
• These are some of the non-CO2 gases that we’d either like to cap to prevent them from being released or burn them so they’re destroyed.

Tell me a bit about Tradewater’s five year journey, and what’s been happening so far.

• There were about six of us when I joined forces with Tim, and now we’re about forty five people.
• We’re based in Chicago and our headquarters are just outside downtown. We also have a warehouse near O’Hare International Airport where we handle and aggregate all the refrigerants that we collect in the United States.
• We also have an international team that’s based in San Jose, Costa Rica. They are responsible for identifying and helping us collect and destroy refrigerant gases around the world.
• Including some of the work that was done by Wabashco before Tradewater was formed, we’ve done the work for over 5.1 million carbon offset credits. We’ve collected and destroyed refrigerants from 49 different states, three different countries, and over 21,000 individuals.
• It’s really painstaking, and we call it small-scale aggregation. We are very boots-on-the-ground, literally handling these 30-pound cylinders one at a time. We go to thousands and thousands of people all over the US and all over the world to collect these containers of gas.
• Many people would consider this a really small effort, driving to the middle of Nebraska to collect one 30-pound cylinder. But if you do that over and over again you can make a huge impact—in fact, an impact worth over five million tons’ worth of CO2. That’s the approach we take to all of this.

Some people may not even realize they’re sitting on a bunch of refrigerants. Have you targeted larger enterprise-level consumers of refrigerants, like companies with multiple properties? On the opposite end of the scale, how do you reach the individual private owners who might have a cylinder or two?

• First off, to be clear, we work with both. But what’s unique about us is that the bulk of our work is the small-scale aggregation. That’s how we’ve grown and developed.
• We do work with large industrial outfits. We’ve done deals with large companies, like large beverage companies with outdated refrigerant systems, where there’s a multi-million dollar capital project with sometimes tens of thousands of pounds of refrigerant. But when things like that happen there are enough actors involved that they know that these refrigerants are potent and need to be handled correctly, and they can either be recycled and reused or collected and destroyed. Often it’s the case that there’s competition to get these large quantities of refrigerants, and if we don’t get them someone else will get them and ensure that they’re destroyed.
• We also work with a lot of enterprise-level companies to help them identify what kind of refrigerants they have. There’s a program called the Catalytic Coalition that works with organizations to help include refrigerant management into their sustainability goals.
• We have much less competition in the small-scale work that we do. That’s the work we do with individuals who may not know that what they have sitting in the garage is potentially harmful for the planet.
• That work is good old fashioned sleuthing and marketing: we put stuff out in the press and online, and we’re often searching around in online marketplaces. We do talks like this one on Supply Chain Next! We do everything we can to let people know that they can contact us if they have CFC or HCFCs in their garages, basements, shops or buildings. We will come out there, buy that refrigerant from you and make sure that it is safely destroyed and never leaks into the atmosphere.

It feels like there is more energy or drive towards sustainability today than there was ten years ago. It’s no longer just talk—there are clear examples of sustainability impacts, like in the work that you’re doing. What do you think is different this time?

• A few things come to mind. This is more anecdotal, but people are starting to feel the impacts of climate change. If you look in the headlines, there are floods, hurricanes, fires, drought—all of these things are very real and it’s no longer a theoretical threat that’s decades away, or a threat that affects people “over there”. The impacts are all over the news, and people are losing jobs, they are losing homes, and they are losing food. It’s become more tangible.
• I think that it’s also because we have a new generation that was raised with recycling and composting and thinking about the planet. Not all of those things are about climate change, but there’s an awareness that we’re seeing that people are demanding that those responsible take action. Whether that wields enough political momentum to push Congress and the Biden administration to get off their butts and do something about this, I’m not quite sure.
• It’s certainly impacting corporations and others who have to deal with the consumer base who don’t want to buy products that are made in a harmful way. They’re saying, “Tell me what you’re doing to make sure your business practices are not part of the problem but part of the solution.”
• I think that this push is not only coming from consumers but some shareholders as well. They’re starting to think that if they’ve got money to invest, they’re going to invest in companies who are thinking smarter or who engage in sustainable or renewable energy. They want to divest from fossil fuels. All of those forces and awareness are driving companies to think about what they’re doing, about their footprint and impact on the world, and what they can do to make things better for the planet, not worse.

It seems like sustainability is now becoming interwoven with economic benefits. For example, in a purchasing decision, if one option is more sustainable than the others then it’s a deciding factor for consumers and even some enterprises. Procurement projects are now asking for sustainability scorecards, where that’s never happened before.

• You’re right, that is the shift that we’re seeing. Costs of sustainable options are coming down, which helps, but people want to know about the sustainability of what they’re buying. They want to know because they see the disruption that can happen from climate change. They want to know that you’re building a business in a way that it’s not going to be disruptive to the environment. There’s more longer term thinking, and planning for a future in which the investments we make now will pay dividends later.
• Where we see consumer choice and buying power is with our offset credits. We’ve talked about the California program and one of the great things for us is that because California has this program that puts a price on carbon emissions, our offsets have an automatic market. So if we collect these CFC refrigerants in the United States and destroy them, we create these great carbon credits that measure the environmental impact, and there are entities that are forced to buy those credits. That creates the economic engine that allows us to make our money back from buying these refrigerants and destroying them, so we can go out and buy more.
• It’s a rule in California that the refrigerants that you collect and destroy have to be in the United States. So what we learned as a company is that this work that we’re doing is important, there’s a lot of refrigerants out there, and so we should be looking beyond the US. The benefit of the work we do, whether it’s in Ghana or the Dominican Republic or Honduras is just the same as if we do it in Nebraska or Illinois. So that’s why we created our international team and started doing international projects. But the carbon offset credits that we generate from the international work cannot be sold into California. It’s not because they’re any different or worse, but because those are the rules.
• That’s why we work with companies like Requis and others, and we say we know there’s a problem, we know how to solve it, we can quantify the benefit that comes from it.
• There’s a credit that results from it and we need people to buy it, take those credits and support the work. If they do that, we can go out and keep buying refrigerant and destroying it and keep the cycle going.
• So the consumer preference and the shareholder preference for sustainability and for scorecards that measure emissions and offsets is super important to us as we try to build this market. We want people to say to companies who are in, for example, the refrigerated foods space, “As part of your work to bring your products to market, you are creating emissions from refrigerants. So, if you also want to be a smart environmental steward and help prevent climate change, you should also be supporting our work as well.” Consumer demand is key to driving that decision making to measure the emissions and offsetting them by supporting work like ours.

Refrigerants and climate change are a global problem, yet you’re still constrained by regional regulations in how you handle this. Are you working with policy groups or international organizations that could help remove those barriers?

• It all comes down to political will. Some of it comes down to accidents of history, some of it is by design or by inability to come to an agreement.
• The California rules are the way they are because of political compromise. There are some other issues, like if you do a project in Ghana, how are California regulators able to verify the work that you did? There are practical considerations.
• Ultimately the environment doesn’t care if the refrigerants are released in Ghana or in South Africa or South America, so we are focused on the whole problem. We look around the world, figure out where the refrigerant is and how we get it destroyed.
• These provincial rules impact us in a whole bunch of ways that are challenging. One is offset markets, where you have some compliance markets where people have to buy these credits that recognize that this work has value. Those have geographic limits to them.
• The refrigerants themselves are considered hazardous waste in many countries, not because they are hazardous to human beings in a direct sense, but because of their impact on the environment. As a result, if we find refrigerant in Ghana and need to move it to another country to be destroyed, we have to go through all sorts of hoops and hurdles to move this hazardous waste.
• Your listeners who deal with supply chains in any kind of hazardous materials will know this even better than we do, but we’re all subject to the Basel Convention. One of the barriers that we face as project developers is that we can find these refrigerants in many countries, but very few countries have the capacity to destroy them safely. So we often have to find the refrigerants in one country and move them to another to be safely destroyed. We have to go through all these permission processes and deal with shipping.
• For example, right now we have a load of refrigerants in Central America that are all ready and tagged to be sent to Europe to be destroyed, but we’re having trouble finding a ship. That’s preventing us from getting this project across the finish line.
• These are just some of the unforeseen ways that these regulations, which were designed with good intentions, are standing in the way of the projects and the environmental impact that we can have.

What does it take to destroy these refrigerants? What is your process?

• The Montreal Protocol, which is the international treaty that phased out the production of these refrigerants because of their impact on the ozone layer, has listed the technologies that are able to safely destroy refrigerants.
• There are two basic types: one is incineration and the other is plasma arc technology. These are very high-heat concentrated systems where you feed the gas through and the heat breaks up the chemical bonds into inert sub-parts that can be burned and destroyed.

I’m imagining that a facility capable of doing this is very special purpose.

• It is. There are a lot of hazardous waste incinerators that could do this, but there are a few additional layers that you would need. First of all, you need to be able to feed in a gas; not all incinerators can take gas feeds if they’re meant for solid waste. You also need particular linings for the equipment, because the chlorine and the fluorine that make up these CFC refrigerants are really corrosive and can cause leaks if you’re not careful. Some incinerators have these, others do not.
• The other thing that’s important is the continuous emissions monitoring system. We have to show all the refrigerant that went in, with the exact type, volume and purity, and we also have to show what comes out. And we have to monitor that continually.
• It’s a key part of what we do to show that nothing harmful to the environment comes out. There are a couple dozen facilities that are set up to do this around the world. There are only a handful in the United States.

A system like that will consume a lot of energy—but I get it that these CFCs are so harmful that destroying them is going to be a net positive. Has anyone been talking about the option of using the developing space-based supply chains to just get things like refrigerants and nuclear waste off the planet?

• I haven’t thought about that one. It’s a new one to me as a solution and it’s super interesting. There are probably a few logistical problems with sending refrigerants into space, considering that it’s a compressed gas. But these are big problems we’ve got to solve, so it’s all hands on deck! Anything that we could be doing we should be talking about.
• On the destruction side, it’s really important to point out that these gases really are that much more potent than carbon dioxide. CFC-12, otherwise known as Freon, is 10,900 times more potent than carbon dioxide. Methane is 28 times more potent than carbon dioxide.
• Just to be clear, when you buy a carbon offset credit generated by Tradewater, we take that full global warming potential and we subtract what it took to move the material and what it took to destroy that material. So the offsets don’t reflect that initial full volume, but the resulting amount after we account for the energy and emissions created while doing the project. As you point out, the net amount is still far greater than the amount it took to do the work, which is why it’s so important that we do this.

As we get close to wrapping up the podcast, what do you see coming up in the next few years for Tradewater, and for climate and sustainability issues as a whole?

• One of the things that I wanted to say, and this may be a bit selfish, but it’s really important that we bring attention to this kind of work. As you point out, interest in sustainability is key, environmental and social governance (ESG) roles are important, offsetting is important.
• One of the things that we’ve come up against is that when people talk about this and think about sustainability is that they immediately think about trees. They think about forests and agricultural products and green products. Those things are important and we need to be doing them but that’s what most people visualize.
• In contrast, the work that we do involves cylinders and incinerators, trucks and ships. So there’s a disconnect in the minds of people when they think about environmental benefits and then the work that we’re doing. If there’s one thing I want people to understand is that there’s more to sustainability and fighting climate change than trees.
• Some of these industrial gases and industrial processes are huge sources of emissions, and the work that we work that we do may not be as charismatic or visually stimulating in the way that I just described, but it is super super important.
• Again, Project Drawdown said that responsible refrigerant management is the number one thing that we can do, partly because they’re so potent, but also because as a result of climate change more and more people are going to need air conditioning and refrigeration.
• So if we don’t get ahead of this problem and start to plan for it in a really smart way we’re in trouble.
• For people who listen to this podcast and think about environmental issues, I really want them to stay within this industrial sphere. I want them to realize that even though it’s not about trees and they won’t be able to put a tree on their corporate brochure cover, what they will be able to put on there is that there’s an impact.
• And if they really want to make an impact in the sense of taking care of a problem that is essential in the fight against climate change, refrigerants are one of those things that they should be looking at within their supply chains, in their facilities, as well as in their offsetting portfolio.

The supply chain community appreciates things that are very practical, and you’re definitely doing something that’s tangible, which is a credit to you. From your early career helping children to your sustainability work now, you’re an amazing person, so thanks for spending some time with us to tell us about Tradewater.

• Thank you so much—I appreciate it and I appreciate Requis’ support and interest in putting carbon offset credits on your platform. I think that’s amazing.

Learn More and Take Action

If you’re already a Requis user, you can talk to support@requis.com about purchasing carbon offset credits on the platform.

• Learn more about how refrigerants contribute to climate change.
• Connect with Gabriel on LinkedIn.
• Visit Tradewater’s website.
• Learn about the Requis supply chain platform.
• Ask for a Requis demo.