Jonathan Maurer: So we see substantial demand outside of the transportation fuel sector. Right now the transportation fuel sector is the highest value off-take. But certainly, when you think about gas pipeline utilities for one having many of them promise their public utility commissions and regulatory commissions to put decarbonized gas into their pipelines. We see this with like Enbridge for example, we see that with NextEra, we see that with SJI. They’re all trying to find decarbonized gas to put into their pipeline and expand that capability. In addition — so that’s going to be a very substantial amount of demand over the next couple of years. Currently, the price is substantially below the transportation fuel market. Beyond that, there’s certainly industry looking to decarbonize in the U.S. And then overseas markets, we see European carbon markets as being potentially very attractive for this.
We’ve been participating in a small way into those European markets and we see those European markets growing as a potential end use off-take. In addition, there’s maritime uses, there is probably a bunch more that I haven’t talked about but when you add all those up, there is substantial demand for this low carbon product and I think we will see more of that coming in the coming years. Maybe Adam, you would like to elaborate on that somewhat.
Adam Comora: Yes. I just wanted to jump back into the policy tailwinds because I just want to maybe elaborate on why these are tailwinds. And we had one other thing on that slide talking about 70% of Americans wanting to do something about climate change. And when you break that down by party or age group that’s where we’re really talking about these tailwinds where if there’s over 90% of democrats and 74% of independents and maybe somewhere in the 40s of Republicans that believe we should be doing something. And there were some really interesting testimony from Republican senators asking for inclusion of RNG projects in that Section 48. It really gets more interesting when you’re looking at the age demographics. Every time you move down 10 or 15 years, the percentages keep moving up higher and higher.
So, those are the tailwinds that we’re talking about and it’s not only whether or not it’s an elastic electricity policies, it’s also coming from the SEC now talking about greenhouse gas disclosure requirements. And our product is zero Scope 1 and zero Scope 2 emissions versus diesel. These are the kinds of sort of trends that are really supportive and we think that cellulosic electricity is part of it. And those voluntary markets continue to grow as well, and obviously, something that we’re always keeping our eye on.
Operator: Our next question comes from Paul Cheng with Scotiabank.
Paul Cheng: The first question is that just curious, the arbitration that in the two California projects dispute, what’s the nature of those disputes and what’s the risk that in your other projects? You will face similar issue or potentially face similar issue? That’s the first question.
Jonathan Maurer: Just kind of discussing it and somewhat here. The situation we have is where we have a fixed price EPC contract for both the Hilltop and the Vander Schaaf projects. The contractor has presented us with a series of change orders seeking to increase the price. We think the change orders are not warranted and substantially dispute the change orders that have been presented to us. We commenced, as you said, an arbitration proceeding, While the arbitration proceeding is continuing and the dispute is being resolved, the contractor is required to continue work during the course of this resolution period. The contract itself for both projects, for each of the 2 projects is fully bonded by licensed sureties who are on notice of our claim.
We believe that our claims have substantial merit. But of course, it’s an early stage and we can’t really predict the outcome. But I can say this, it is limited to these 2 projects, it is not affecting other projects and we don’t see that it would affect future projects, Paul.
Paul Cheng: Jon, is this the first time you work with this contractor or that you have worked with them before? And also whether this contractor have any other project other than those 2 that they are working on with you?
Jonathan Maurer: This is the first time we’re working on it with them. The contractor was developed and sourced by our co-developer in the project is a reputable counterparty and has some other projects in the industry, but just not with us. And we think it’s really very narrowly focused on these two projects and not more broader than that.
Paul Cheng: And maybe this is for both Adam and Jon, just curious, not just OPAL, but the industry has been having a tough year over the past 12, 15 months. And OPAL, it looked like very expensive and very attractive. When you talk to investors, where you think is the disconnection? What people do not understand about your business? Which part?
Jonathan Maurer: Yes. So it’s interesting that you say that the industry has had a tough year. I suppose that you mean, as exhibited by the stock price, because we see gathering tailwinds in the industry as Adam was alluding to before and we are particularly well poised to really benefit from those tailwinds and we see a lot of optimism as we look forward. But in terms of the stock price of us and our competitors, I can address ours right off the bat that it’s strictly a matter of a low float stock and trying to address matters for improving that float will really take care of that. Before I get to the float section, I will say that we think that the cadence of increasing projects into construction, increasing projects into operation and increasing the overall output will have a significant benefit to us, not just from a cash flow, but from really expanding company size.
