The big idea: Entrepreneur Brent Constantz, a coral reef scientist, was well aware of the destructive effects of carbon dioxide (CO2). In 2007, he founded Calera Corp. to make cement, the main binder for concrete, by mimicking nature’s low-energy process. The company soon discovered a host of other waste reuse, waste reduction and revenue-generating opportunities.
The scenario: Cement contributes 5 to 6 percent of man-made CO2 emissions. Calera attracted the interest of clean-tech venture capitalist Vinod Khosla when it was discovered that its processes benefited from integrating CO2 emissions. It formed carbonate cement from seawater with the addition of CO2. By sourcing CO2 from nearby power plants, Calera became a carbon capture-and-sequestration tech company, which furthered interest from investors and environmentalists. If a carbon price was exacted on U.S. businesses, Calera could enter into agreements with the firms, which would otherwise have to buy carbon credits.
Other opportunities emerged. For example, when the manufacturing process stripped magnesium and calcium ions from seawater or even some wastewaters, it could yield potable water, another potential revenue stream. Second, in lieu of seawater, Calera could use the processed saltwater that is left behind by oil and gas drilling as hazardous waste. This would be a practical application of industrial ecology, whereby waste streams of one process become material inputs for another, saving energy and material.
However, financial, technical and raw material supply hurdles remained. How could this business help address climate change? How could it insert itself into a well-entrenched, capital-intensive industrial ecosystem?
The resolution: The company needed to develop a business model that positioned it favorably by focusing on its core competencies, including determining what processes to outsource; finding the right collaborators; protecting intellectual property; forging a defensive market position against rising competition; and taking advantage of beneficial policy changes, such as a potential U.S. carbon market.
Initially, Calera was also careful to maintain control over decision making. It limited the number of outside investors and board members and entered into strategic alliances selectively.
Calera focused on outperforming rivals by using less energy.
The lesson: Dedicated to reducing CO2 emission, Constantz found a solution in the cement and carbon sequestration business. He took a known, successful small-scale technology that mimicked nature’s own processes, scaled up and developed new revenue streams.
Herz is associate director of sustainability programs and Larson an entrepreneurship professor at the University of Virginia Darden School of Business. The “Case in Point” was adapted from an original Darden case by Mark Meier and Andrea Larson.
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