Water is something most of us take for granted. We turn on the tap, and it's just there. But behind that tap is an increasingly strained system that is quietly becoming one of the defining infrastructure challenges of our time. Just in the US, McKinsey estimates we are underinvesting in water assets by about $100 billion annually, with the cost only compounding as more investment is delayed. The affects are already being seen with over 20% of treated water lost through leaks in pipes that are sometimes 70 years old, generating no revenue for cash strapped utilities. The record datacenter and industrial development buoying our economy is now facing major opposition often due to local water demands. In addition, there are growing concerns and regulations around the forever chemicals, known as PFAS, showing up in more of our water supply. Today, I'm joined by Guillaume Clairet of H20 Innovation, who has helped build the company into a water treatment powerhouse over the past 25yrs. From massive municipal reuse projects to distributed systems serving the critical industrial facilities, H2O is leading the water infrastructure buildout and offers a hopeful outlook on how we can start addressing our water needs. Let's dive in.
Water is something most of us take for granted. We turn on the tap, and it's just there. But behind that tap is an increasingly strained system that is quietly becoming one of the defining infrastructure challenges of our time. Just in the US, McKinsey estimates we are underinvesting in water assets by about $100 billion annually, with the cost only compounding as more investment is delayed.
The effects are already being seen with over 20% of treated water lost through leaks in pipes that are sometimes 70 years old, generating no revenue for cash-strapped utilities. The record data center and industrial development buoying our economy is now facing major opposition, often due to local water demands. In addition, there are growing concerns and regulations regarding the forever chemicals, known as PFAS, which are showing up in more of our water supply.
Today, I'm joined by Guillaume Clairet of H20 Innovation, who has helped build the company into a water treatment powerhouse over the past 25 years. From massive municipal reuse projects to distributed systems serving the critical industrial facilities, H2O is leading the water infrastructure buildout and offers a hopeful outlook on how we can start addressing our water needs. Let's dive in.
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Gil: I'm Gil Jenkins.
Hilary: I'm Hilary Langer.
Guy: I'm Guy Van Syckle.
Kenny: I’m Kenny Gayles.
Gil: And this is Climate Positive.
Guillaume Clairet: The trend towards water reuse, the trend towards not using traditional sources of water like wells, rivers, lakes that deplete themselves, and going to resources of water for whatever need you have, that are either renewable or somewhat infinite, like sea water and wastewater. That is the trend. That's what protects industries from the water risk, you know, from water scarcity. If you're an industry like power or data center or semiconductor that uses a lot of water, you want to have something like, you know, to count on for the next 40 years.
Guy: Water is something most of us take for granted. We turn on the tap and it's just there. Behind that tap is an increasingly strained system that is quietly becoming one of the defining infrastructure challenges of our time. Just in the US, McKinsey estimates we are under-investing in water assets by about $100 billion annually, with the cost only compounding as more investment is delayed. The effects are already being seen with over 20 % of treated water lost through leaks, in pipes that are sometimes 70 plus years old, generating no revenue for already cash-strapped utilities. The record data center and industrial development buoying our economy is now facing major opposition, often due to local water demands. In addition, there are growing concerns and regulations around the forever chemicals, known as PFAS, showing up in more of our water supply. Today, I'm joined by Guillaume Claret of H2O Innovation. who has helped build the company into a water treatment powerhouse over the past 25 years. From massive municipal reuse projects to distributed systems serving the critical industrial facilities defining our future, H2O is leading the water infrastructure build out and offers a hopeful look on how we can start addressing our water needs. Let’s dive in.
Guy: and thank you so much for offering up your time. To kick it off here, you've been with H2 Innovation since it was essentially a startup, right, back to 2004. We'd love to hear what drew you to the water treatment, water supply space in the first place, and then what's kept you there for over two decades now.
Guillaume Clairet: Yeah, thanks. Thanks, guys. And thanks for having me. Pleasure to be here. Well, what got me then the first place, the short version I often say is like, you've probably heard of Aaron Brockovich in the US. Everybody's heard about it because of the movie, of course. But essentially, I have a fairly similar story up here in Canada. When I was a student in physics engineering, actually, one of my professors in hydrogeology got me involved into a fascinating story, which was essentially
Guy: Yeah, absolutely.
Guillaume Clairet: I mean, a lot of people got sick here and of different sorts of cancer in Quebec City, Canada, where I'm from, because of military training. There was a military base up north of Quebec where from the ammunition, you'll shoot on various targets and ultimately the contaminants from the ammunition will percolate into the groundwater and that groundwater will migrate over time, sometimes 10 years, 20, 30 years.
And in this case, were making that groundwater and was making its way to individual households wells. And so essentially people were drinking the water that was heavily contaminated with a cocktail of contaminants that wasn't good for health and ultimately got them sick. So essentially our job was to go across Canada and monitor and investigate and drill wells and understand really whether there was other places in the country.
where such things could happen, right? Because it was a big thing that came out in the news and you don't want that to happen. So as a student and as a research assistant and stuff like that, I came to realize that water quality was a huge problem and sometimes one that was very much misunderstood. People couldn't detect it, couldn't know, and it would take years to know and it was already too late. So it really got me passionate around water issues, both drinking
Guy: Great.
Guy: Right.
Guillaume Clairet: but also waste, how do you prevent the contaminants from getting into the water? And ultimately that's how I really got hooked to water and I got passionate about it. And so that kind of leads into your second question, which is why did I stay there for now 25 years? Well, it's really, it is a passion. It's a true passion. And it's a passion that I share with the whole entire water community. Like my team is passionate about water. The people that we work with, you can tell that in our industry, there's definitely that common theme of people sticking around because they...
They like that they can make a difference in solving real problems.
Guy: Right, really tangible problems that I think resonate with the broader community, right? Oftentimes.
climate issues, emissions, right? It's a little bit more ethereal for folks, but when you're talking about water, something that people interact with every day and can really connect with that. So. Yeah.
Guillaume Clairet: It's in everything we do and in our everyday lives, for sure.
Guy: Amazing. Well, I'm grateful for you, committing yourself to the passion and making that impact. And when you look at, you know, addressing water quality issues, the treatment side of things, to me, it seems like kind of a broad landscape of the ways that.
Guillaume Clairet: Because.
Guy: improving water supply, treating it. Is there kind of a standard menu of technologies you're typically deploying across projects or is it fairly different based on any customer needs? So I think just kind of framing up what that menu works like and who your servant would be helpful.
Guillaume Clairet: Yeah.
Guillaume Clairet: That is such a good question for the water sector in general. But I would say that the toolkit that we have and others have, the toolkit is standard. But every project is different. And why is every project different? It's because every water quality is different. You don't treat sea water to make it drinkable the same way that you'll treat a pristine well water source or river water.
You don't treat wastewater down a switch pipe the same way that you treat industrial wastewater coming from a power plant. So because every project is different, you need to have a different lineup, right? Or we often call it flow sheet of the various technologies that you have, right? So there's a common theme in our case where we focus around membrane technology. We have three core membrane technologies, MBR, UFRO,
And then you have to place them to make a difference for the specific water quality that you have. And you often need pre-treatment, post-treatment. So you can have solutions that'll have just one part of your standard toolkit, just an RO system. And then you can have some places where you're going to need a lineup of 10 different technologies, know, steps to get, to convert the water quality that is given to you to the water quality that you're trying to achieve. So.
Very highly customized project, but standard toolkit as to how you solve the problems in between.
Guy: got it right how you're bringing together those different components into that flow sheet across different customers. obviously, think the depth of experience your team has working across all these different sectors is super important about thinking about how those different technologies all fit together. Do you have a favorite project example that you can maybe walk us through to get us a sense of the team's impact?
Guillaume Clairet: Yeah, after 25 years, this is a tough one because I have quite a few. I probably have a deck of cards full of favorite projects, but I'll say that I have probably two favorite ones. One is industrial and it's always a bit harder to talk about industrial projects in detail. The one that was career changing and I love is actually municipal. I'll probably start with this one because it's a really meaningful one and explains what we do really well that's transferable also to the industrial sector.
Guy: You got a few, you got a few. Yeah.
Guillaume Clairet: And it's the Orange County Water District project in Southern California. Actually, I'm based in Canada, but I lived in California for a few years in year 2007 to 2012 or so. And one of the first project I got involved with is that project where in fact, what's happening over there is that Orange County is just south of Los Angeles, huge population growth over the last 50 years. for the vast majority ofthat region, they're using
groundwater aquifer to feed the population, whether industrial customers or households, they're drinking ultimately water that's been into the aquifer. And the aquifer was depleting itself. And more importantly, it was not only depleting itself, the salinity level was increasing. Why? Because when you pull out too much water, the hydrostatic pressure in the aquifer drops and then the seawater was starting to intrude into the aquifer. So over time,
Guy: Yeah.
Guy: Right? Right.
Guillaume Clairet: You can see the salinity level in those wells increasing. So what happens? mean, you can't drink brackish water, not to mention seawater. And so there was a bit of a crisis to manage. And so how do you prevent that from happening is to actually replenish those underground reservoirs of water. What can you replenish the water with? Southern California has no water. So you could actually desalwater and replenish.
Guy: Hmm.
Guy: Great.
Guillaume Clairet: That's fairly expensive. In some cases, it makes sense. There was the San Diego plant that was built. But what they decided to do is really to use the wastewater. Because the wastewater massive plants that were down there was like there was some preliminary treatment that was there to meet certain level of discharge requirements and discharging to the ocean. There was an ocean outfalland that water would ultimately go into the ocean. So they basically had a very clever idea back in the 70s to start piloting and...
Guy: Mm-hmm.
Guy: Mm-hmm.
Guillaume Clairet: and ultimately led to the largest water use project in the world, Orange County Water Replenishment Project, which is to take the wastewater from those traditional wastewater plants that have minimum wastewater treatment, add an advanced purification facility on the tail end of that, make the water of drinking water quality, even exceeding drinking water quality, and to re-inject that water into the sources that were used for drinking water.
So it's like an advanced water recycling scheme. We call it IPR indirect potable reuse, because it actually goes back to the environment. But ultimately, when you go to the facility, and I was there when we commissioned it, you can drink a glass of water at the end of the treatment. And it's full circular economy. It's like game changer.
Guy: Mm-hmm.
Guy: Yeah, no, that's fantastic. And are you see, I know in certain portions of the world, we're seeing more of kind of the water reuse side of things. Obviously that incredibly innovative project. Are you seeing a trend in that direction of more water reuse kind of opportunities or like need to go that direction?
Guillaume Clairet: Absolutely. 100%. 100%. I see a trend in going into sources of water that are infinite, renewable. You're never going to run out of wastewater. We're never going to stop flushing the toilet. We're never going to run out of seawater either. So we got to stop. Desalination is a portion of the portfolio that I think is well deserved. So the trend towards water reuse, the trend towards
Guy: Mm-hmm. Right.
Guy: Mm-hmm.
Guillaume Clairet: You know, not using traditional sources of water, like wells, rivers, lakes that deplete themselves, that are limited in volume, and going towards sources of water for whatever need you have that are either renewable or somewhat infinite, like sea water and wastewater. That is the trend. That is the trend. That's what protects industries from the water risk, you know, from water scarcity. If you're an industry like Power or Data Center or Semiconductor that uses a lot of water,
Guy: Mm-hmm. Mm-hmm.
Guillaume Clairet: You don't want to count on climate change and whether the aquifer is going to, or the rainfall is going to allow you to produce whatever it is you produce. You want to have something to count on for the next 40 years. So your investment in a large fab is going to be worth it for many, years. So definitely a trend happening there for sure.
Guy: Yeah, absolutely.
Guy: Fascinating, fascinating, right. And I think you touched a little bit there to hear a lot about kind of the circular economy and it's something that's happening in the water space today and has been for years. So yeah, again, appreciative for you and your team advancing the good work there. We'd love to hear about the split that you're seeing between, we talked a little bit about the municipal realm there and touched a bit on.
the industrial space. How are you seeing kind of the growth between those two right now and the split, I guess, your business today between municipal and industrial as much as you can share?
Guillaume Clairet: Yeah. So, so they're both interrelated, right? Cause ultimately when you, when you serve industrial and we have a focused towards industrial, mean, that's not a secret. but we, we, you know, we're born and raised into municipal first and foremost, right? So we, through the 25 years of existence of H2O, we went into, you know, mostly focused on municipal to like, you 50, 50. And now I would say that, you know, we, we got a bit of a more of a focus on the industrial or I wouldn't, I wouldn't necessarily say.
industrial more so than non-municipal. But ultimately, when you go to industrial or decentralized, you are becoming a solution provider that replaces what the municipal utility can not always do. So data center is a good example. They can actually take the water from the utility, the municipality, or they can treat it themselves. They have a choice to make. So they're heavily interrelated. A lot of time,
Guy: And just pausing there, what goes into that choice between taking from the municipality or building out your own kind of onsite treatment system.
Guillaume Clairet: Yeah, good question. Speed, cost, and risk. if you want to be master your own destiny in terms of cost, we have an industrial customer in the wider Atlanta region that know for a fact that their water bill is going to go up 10 % per year for the next 10 years. That's a pretty steep curve.
Guy: Mm-hmm.
Guy: Say 10 % a year.
Guillaume Clairet: 10 % a year for the next 10 years, publicly statement, public statements that the, literally, because those.
Guy: Cheers.
Guy: Yeah, that's crazy because we hear all the time about power bills going up. We're not hearing the same thing on the waterfront. Or at least it's not, you know, front page of the Wall Street Journal or, you know, these various things.
Guillaume Clairet: Yes, the water is, I mean, when you start studying rates, right? And we have to do that because we have, I mean, we go after places where water is expensive, but water is expensive everywhere. It's just in some places is so heavily subsidized that it's cheap. like, you know, it's fake low cost, right? It's an under-invested cost. Exactly.
Guy: Exactly. It doesn't track the intrinsic value of it or the scarcity.
Guillaume Clairet: where people realize there is a real value, an intrinsic value to water, the price of water is priced fairly, I would say, and or is on a trend to be priced fairly, like in this specific region in Atlanta. And when that happens, then all of a sudden, you have a lot of opportunity to create economic value for those customers. Because we don't only bring the technologies
to the table, we also bring the financial solution. And we can give them a much more predictable, you know, source of water supply in terms of cost over 25, 35 years, then like, you know, being the victim of the local government that one day realizes, oh, we're not charging enough for our water. We need to put like a hundred percent increase over the next, you know, five years. Right. And so that's, that's the big shift. That's why
Guy: Right, right.
Great.
Guillaume Clairet: the trend towards more industrial, you were asking about what makes it, like I said, speed, like speed because you can deliver faster than a utility can deliver, generally speaking, thoseprojects take a long time versus decentralized. And basically the risk of being exposed to increase, the price increases, that's really what drives that sort of switch from
Guy: Mm-hmm.
Guillaume Clairet: counting on municipal utilities to deliver an essential resource to trying to do it either on your own or via long-term agreements, you know, with water supplier, water source service.
Guy: Got it, got it, right. That level of control, that level of long-term predictability in pricing, super important as you're investing hundreds of millions of dollars in a data center, industrial facility, what have you, makes a ton of sense. Got it. And you touched on it there a bit. Could you just like, what's kind of the average cost to one of these projects? And you said, kind of looked at,
Guillaume Clairet: predictability long-term. Yeah.
Guillaume Clairet: Exactly.
Guy: 15, 20 year contracts. What do you see in there on what the average project looks like maybe on the non municipal side?
Guillaume Clairet: Yeah, it varies a lot, you wouldn't, I mean, you you, some, some, don't, but like some, some can offer like, you know, building level, you know, what are we use. And, and in those cases, the, the, the project can be, you know, very small and less than 2 million, but in the projects that actually we do, well, we actually invest long-term capital, the setup, the setup costs are somewhat meaningful. Soit's rare that you engage in such projects if they're less than 10, even less than 15 million.
But some of the projects may actually go up to 200 million, right? So, you when you're asking about average, you know, take a number in between, you know, I would say probably a 30 to 50 is a good spot at this point of the curve. you know, it ultimately is directly related to the water consumption. So how big, you know, how big is the water demand? What's the flow? So a hospital will have, you know, a slightly smaller flow than a university campus. A data center will have less flow than a semiconductor facility.
It's really based on the flow. Some water consumers, like semiconductor facilities, they use a lot of water, comparable to cities of hundreds of thousands of people.
Guy: And I know as you're kind of working and advancing the models on the serving these various industrial companies, having the build on operate contracts, you all made a acquisition recently in the next era distributed water business. So I that was in 2024. What kind of went into the thesis there and what were you seeing in that water hub?
model that, and I know you've done a number of acquisitions over the years, but maybe talk to us kind of what you saw there and the broader, the broader path ahead.
Guillaume Clairet: Yeah, yeah, that acquisition was highly transformative, right? Compared to the 19 previous ones we've done, it was a very transformative one. And it was a different business model compared to what we had been known for before, right? We've been known for supplying technologies and supplying operation and maintenance services, right? And never to actually own assets. So what went on? Well, first and foremost, and it's important that
Guy: David.
Guy: Mm-hmm.
Guillaume Clairet: So in understand that we had been involved in the portfolio and the park of assets that Nixtera own because we had been supplying technology and services. So we were operating those assets, right? So there in itself, there was an inherent knowledge of the business model. You know, we were there daily. We were interacting with off-dakers, with the water purchasers. So we had a really goodunderstanding of the business case and of the assets that we acquired.
Guy: Mm-hmm.
Guillaume Clairet: But strategically, why did we want to do that? Well, we've been talking about it for a long time. When you look at the trajectory of H2O, when we first started, all we did is supply system skids, right? Somebody would say, hey, I need to reverse osmosis systems for a mining customer because I want to minimize my leachate discharge to the environment. We would sell them a system, press on, and then we went into servicing it. And then we went into providing consumables for
Guy: Mm-hmm.
Guillaume Clairet: you know, having longer term relationship, longer, longer term revenue streams. like that was us trying to create that recurring base of revenues that was in the early 2000. And then we said, well, you know, the most recurring revenue that we could have is when we, when we start operating the plants. so in 2016, we went into MNA and acquired like five regional O &M players in the U S to provide an operation maintenance services. So think about it.
Guy: Wow, good on you for integrating all that as SEO seems like a lot. Yeah.
Guillaume Clairet: Yeah, it's not easy. It's not easy, a lot of people have tried. think we did it pretty uniquely and we can talk about that later and how we did it. But if you look about the strategy, first it'sproviding the tool, the technology, second, the consumer, third, the O &M, creating more record-breaking revenue, creating more proximity to end users. And at one point, in some instance, even in Western Canada, we had built an entire plan, turned it on,
delivered it to the customer and then he sold it to an asset owner for like a 20 year contract. And we're like, whoa, we did all the hard work. the most, greatest value from a capital perspective, the greatest value comes when you actually own and operate it for the next 25 years. So we were like, we should probably, so we'd been looking at that business model of being an asset owner for a while. was the natural continuation of what we'd been trying to build. So when Amber came to the table and got us private in 2000,
Guy: Yeah, right. Yeah, of course.
Right, Yep.
Guy: Mm-hmm.
Guillaume Clairet: in 2023, Amber, it's important to understand they come from the large infrastructure world. They know infrastructure investments, long-term contracts. And I think that was really where everything matched. It was our desire to be an asset owner with capital providers that actually knew that entire model and how valuable a part of assets with long-term contracts can be. And then the opportunity to buy one of our
main customer that didn't necessarily find its core to its energy business, right? Because it was water. They realized water was different. And then all of sudden, it just made so much sense. was really, all the pieces of puzzle fell in place. And we were able to start that water infrastructure division arm, which is thriving right now. It was really striving.
Guy: Yeah, no, and that tracks so well that progression, right, from going from the initial kind of development team that's designing these assets, providing the technology, and then naturally progressing into the long-term owner and getting to look at assets that you understand very well and then bring in a tremendous team over at Ember. So it makes a ton of sense. Very, good.
Guillaume Clairet: Yeah. And the operation piece in the middle was very key, right? Because to be a good asset owner, some industries where you have those contracts will tend to outsource operations. I think that in water, I wait to see how it's going to play out, but outsourcing operations, I'm not sure that it's going to be such a trend. think being a good water asset owner,
Guy: of course.
Guillaume Clairet: comes with being a good water acid operator in a way.
Guy: Yeah, no, that makes a ton of sense. that's one thing we of course see on our energy infrastructure assets and our broader assets. It's making sure that you're partnered with the best operators that are really invested for the long term and great with the depth of understanding of what goes into that. One other question on the...
motivations of customers, right? You you obviously serve some really big time industrial partners and municipal partners. Why are they looking to, you know, bring in someone like yourself to outsource things? Why don't they just kind of buy and hire the people?
Guillaume Clairet: So I think I would split the answer. There's kind of two questions here, right? So the drivers, you know, and then why not doing themselves? What's driving them to want to do these kinds of water use decentralized projects is one, and then why not do it themselves? They can certainly do it themselves. I think, you know, what they find out when they try to do it themselves is like expertise, right? And sometimes also the...
Guy: Mm-hmm.
Guillaume Clairet: You know, they want to put their capital in their core business. you know, that, that trend, especially in like C-suite and executives of, letting the capital of the experts at whatever it is that they're doing to serve the CapEx needs. So it's off balance sheet, right for them. And, and for us, you know, we put our capital towards stuff that we really know how to design. So we'll make decisions, right. During design that won't necessarily be based on like a consulting engineer telling
us that we should do it just for redundancy reasons that will creep up the cost. We'll make the decision based on, we going to be able to keep the uptime, allow us to invoice all the time and then rationalize the cost and the risks that we're taking on OPEX versus CAPEX decision all the time. So really, think it's putting the main reasons why the people that let us do it instead of
Guy: Mm-hmm.
Guillaume Clairet: them doing it themselves is they realize in early preliminary studies that we are probably able to do it at ultimately a lower capital cost. It's a better return for them. It's faster as well. We can probably do it. Once we sign a WPA, a water processing agreement, 12 to 18 months later, the asset is in place versus for them. Often they see these projects to potentially last for five, six years before they can go to commercial operation.
So question of speed, question of risk allocation, risk being on the side of the capital provider. That's why they give it to us as compared to give it to them. Now on the trend side, like why do they want to do project in the first place? I think we touched on it a bit, but it's like protecting against cost escalation. And of course, all the ESG trends, play a role, but I would say that's a secondary role. Nobody really goes into long-term contract with us like that if there's not like some form of ROI, right? Like a real economic ROI.
Guy: Mm-hmm.
Guy: Yeah.
Guillaume Clairet: So that's the first criteria. then, you know, obviously it's like, they're going to be claiming and shouting loudly that they save, you know, one industrial customer saved 90, like 90 % less consumption of the utility, you know, water and the utility water was, was, know, in need of that water for other, other, other, you know, development in the region, 60 % less discharge in the sewage network. Right. So those are
Guy: Amazing. Yeah.
Guillaume Clairet: big savings and they can hit their KPIs from an ESG sustainability perspective on top of creating an economic return.
Guy: Of course, no, incredibly impactful. talk a lot about like the energy water nexus, right? Water being incredibly energy intensive to move. the associated energy cost savings, emission savings with that really, really important. I've also heard that the labor, the specialists that work in the water space, a lot of them have been in it for...
Guillaume Clairet: Exactly.
Guy: 30, 40, 50 plus years and it's kind of a labor force that might be trickier to find graduating now. Have you seen much of that on the, like finding the right people and is that kind of pushing more folks to your model as well?
Guillaume Clairet: So, yeah, so when you hear about that, think, so you hear about the fact that people stick around, like people do stick around, they love it, it's complex, there's lots of challenges, it's noble, know, the mission is great. So it attracts people and it tends to keep them. So that's a good thing. Now we need more because the sector is growing and it's getting more and more complex, right? So, you know, more brains and more brain power is in need in our sector.
Guy: Mm-hmm.
Guy: Mm-hmm.
Guillaume Clairet: When you hear that there's a scarcity for the workforce, I would say it's even more true when you look at the blue-collar workforce, the actual operators out in the field. The operators out in the field in our world, like a T5 operator in California, that's a highly educated individual. T5 suits for like, that's the highest level of certification in California to be a water system operator.
Guy: Mm-hmm.
Guy: What does T5 mean?
Guillaume Clairet: And so, you know, those guys can be making north of like $200,000 a year in a, you know, at least it's perceived often as blue color. I would not call a T5 a blue color anymore, but it'sperceived as blue color.
Guy: No, yeah, the level of expertise and knowledge of incredibly complex systems, right?
Guillaume Clairet: Exactly. so that is where the engineers, the business guys, the sales guys, people that understand water, that's probably less hard to find. finding people that are like boots in the field, but smart boots in the field, as every water treatment plant gets more sophisticated as we go, because the problem is more complex, the schemes, the flow sheet is more complex, that's where it's hard.
That's where we're finding that we're not, as a society, we're not training enough of these guys. That is one of the challenges our industry is going through, for sure.
Guy: Yeah, no, and I think, really a tremendous opportunity for folks going forward, right? mean, the opportunities that you've talked through just so far, right, in terms of this growing space, the demand. Do you have any thoughts on how we bring more folks into that labor force?
Guillaume Clairet: huge huge
yeah, I mean, actually like, you you should talk to our VP HR on that. mean, we have, have a whole suite of, of programs, you know, we're teaming up with like schools and different regions to like get them through the, through the system, get them interested, get them passionate. You know, it's actually pretty easy to get them passionate if you actually bring them to, you know, fun locations and make them understand what they're going to be working on and what their career path is going to look like. So it's not, it's not different than like.
you know, any other field, right? How do you get lawyers interested to become lawyers or, you know, financial analysts to get interested? It's similar, but in water, because it's kind of out of the beaten path, right? Like who goes to a wastewater treatment plant when they're in high school? Like have you visited a wastewater treatment plant when you were in high school? I... Okay.
Guy: Yeah, yeah. I have to say I did. I was very proud of that. Yeah, yeah, yeah. But I was definitely an Enviro nerd pretty early on. But now I think, our average exposure is very limited. Maybe you drive by it down the highway. But yes, seeing it up close is incredibly.
Guillaume Clairet: Ha
Guillaume Clairet: Exactly.
Guillaume Clairet: But look, ended up being, yeah, that's what's powerful, seeing it, touching it. then, you know, so I think it's part of that. It's teaming up with the different levels of education from, you know, high school for entry level, you know, operators, technicians to technical schools, to universities. That's ultimately a way to start the cycle of new brains in those professions.
Guy: And then looking more broadly, we touched a bit on the water scarcity trajectory that's driving demand for H2O's services and treatment facilities. We also hear a lot around these Forever Chemicals, these PFAS solutions. How are you seeing that, kind of the broader concerns around PFAS regulation there?
both in US and Europe, elsewhere are like driving opportunities for you all and how that kind of progresses over.
Guillaume Clairet: Yeah, PFAS is an interesting topic, but I would just bring us back in history a bit. Every 10 years or so, the water sector has one contaminant that comes up, makes it to the news, and then it becomes a big deal, right? When I started, one of the reasons H2O Innovation was started is because seven people died in Walkerton, Ontario from E. coli contamination. That's a virus.
Guy: Mm-hmm.
Guy: Yeah
Guillaume Clairet: And so there was a whole regulation around the world put in a different way, or form in the U.S. There's like a log removal value of viruses that is an EPA driven regulations where everybody all of a sudden needed to start being able to prove that they were removing a certain...
number of logs, which essentially means like 90, if you have one log, it's 99.9 % removal of that particular, you know, organism virus or bacteria. So you needed to be able to prove at any drinking water sites that, know, you would be able to move two, three, four logs. So 99.999 % of those various contaminants. So PFAS is the new, is the new one, right around the block. But it, but it's something that we as water professionals have seen over and over.
Guy: Yep.
Guy: Mm-hmm.
Guillaume Clairet: new regulation comes in, then how we treat it. And, you know, is there any money that's provided to fund all those important upgrades that the water utilities need to go into? So getting more specific on PFAS, what's happening? So two things, the most important market that's been generated from PFAS is the, I would say site remediation market. So the areas where there was contaminations, was three big lawsuits in the US.
heavily publicized. so that money goes to essentially fund remediation of sites that have a really high level of PFAS contamination. So you could call it environmental remediation, PFAS removal, wastewater-ish, because it's already in the ground or in a water body of some sort. And a lot of projects are happening right now. I'll give you good examples. If you want to build
Guy: Mm-hmm. Yep.
Guillaume Clairet: in a site in Eastern US that has PFAS in the aquifer, you're going to dig a hole and then that hole is going to have water coming in. That water is going to have PFAS. You're to have to dewater that hole. Then you can dewater it and put it in the stream. You have to dewater it and treat for PFAS before you put it in the stream. that is a real need to remove PFAS that is happening today. It's a real market and a lot of companies are successfully tapping into it.
Guy: Got it. Got it.
Guillaume Clairet: When we talk about regulation, we're mostly talking about the drinking water regulation. So that is, there's a little bit, like little levels of PFAS in various water stream and the current water treatment plant cannot achieve enough removal or no removal of the PFAS because it's a really small molecule that ultimately gets removed downstream. I would say that is a market that is
Guy: Mm-hmm.
Guy: Mm-hmm.
Guillaume Clairet: slow. mean, the regulation has been put in place. It's been, you know, is it really going to be enforced or not? It's pretty aggressive. and the utilities ultimately are municipal governments. Not all of them have the same level of sophistication. So not all of them have already a plan to solve it. Generally, and I don't want to get too detailed and bogged down on technology, but the technologies exist to treat it, right? So whether you use activated carbon resins or reverse osmosis,
the industry is ready to treat it, it's more like are the clients really ready to put in that extra layer of treatment? Are they doing it and are they able to afford the bill, you know, the extra cost of
Guy: Yeah, how are they able to pay for that, right? A lot of caps on municipalities' ability to raise water tariffs, what have you. So, yeah.
Guillaume Clairet: Exactly. And maybe the last thing to understand on that is that once there's a big difference in between removing PFAS and destroying PFAS. Because the thing with PFAS that we call them forever, canicles for a reason, is that they are in the water cycle forever once they enter the water cycle. So the only way to get them out of the water cycle is to try to capture them at one location and to destroy them. But that, the destruction cost,
is like an order of magnitude of 10 times the removal cost. It's much more expensive to destroy PFAS than it is to remove PFAS. So first and foremost, remove it from the drinking water supplies. I think that'sgoing to happen. Second, destroying it so it never reenters the water cycle. I think that's a bigger question that's going to take a lot longer to achieve.
Guy: of it right yep
Guy: Got it, got it. And if you're to just, Phillip and I, if you're just to remove it, are you able to take that to landfills now or where would the removal kind of go?
Guillaume Clairet: So when you remove it, it depends on the removal technique. If you remove it with carbon, then you've got to bring the carbon that has absorbed that molecule. So the carbon is essentially absorbing. So like this PFAS sticks on it. Then you've got to take the carbon and bring it to a high temperature incinerator to actually destroy the PFAS under high temperature.
That's the only way to get it up. you bring it to the landfill, that's actually not allowed right now. But if you got to bring it to places where ultimately a landfill will have a leachate, and then can you destroy it? You would have to destroy it at one place because the water doesn't go away. It needs to circulate. A landfill has a collection system for the leachate in a landfill. that's the whole thing with the water cycle.
If the molecule does not get destroyed, it's going to end up, know, so where do you destroy it? that incineration or with some technology such as electro oxidation where you, you bombard the molecule and you break that fluoride carbon bond and by breaking it, you actually destroy the PFAS. That is where the industry is going in, you know, is literally destroying the molecule when, when it's in a place where it'sconcentrated enough. That's actually what we try to do is we concentrate it with RO.
So a reverse osmosis will have the permeate side. It'll go to drinking. It'll be PFAS free so that people can drink and no problem. Then the concentrate, instead of sending it back to, let's say, sewage or to an environmental discharge, you take the concentrate and you concentrate further to a point where PFAS is heavily concentrated. And then you can break that PFAS molecule and then you're PFAS free. That'swhere...
Guy: Mm-hmm. Mm-hmm.
Guillaume Clairet: Ultimately, if we can find the money to justify doing that, that's where the society should be going, in my opinion.
Guy: Well, super helpful walk through there on that front. think we hear about it a lot, but to get that perspective on kind of the difference between removal, destruction, the actual processes around that, super helpful. So we talked about a bit how you've seen various kind of flows of trends in the water treatment space, things that kind of come to
Guillaume Clairet: Yeah.
Guy: attention, how are you thinking about H2O Innovation's path over the next five years and how do see the company evolving in terms of top markets you're surveying or things that you're particularly excited about?
Guillaume Clairet: Yeah. So I mean, I like where we are in terms of platform, right? I think we have a good platform. We have enough tools in the toolbox. We have a lot of different business models we can offer. Like, so, you know, we've been agnostic in a way to the business model. What we like is when we find a customer that's important to us and that's got real water issues, we want to be able to solve their water issues. If they have an operations problem, they don't have the talent to operate properly the facility and it doesn't get maintained properly.
we'll offer them an operational maintenance contract. If the problem is capital structure, we'll offer that to actually finance at home in the facility. If it's a treatment, then we offer like a treatment step. So I think that like who we are as of today is probably who we want to be in five years. But like we obviously want to reach a different scale, right? the, especially on the water hub side, our decentralized asset, where we provide financial solutions and ownership.
Guy: Mm-hmm.
Guillaume Clairet: that is gonna scale in a massive way over the next five years. So I would say that right now, this is the newer division of the company. I mean, I would like to see us in five years, but that's like the prominent one where like, know, the, because obviously as a leader of each joint, I've to think about value creation and that's where the greatest value creation can be. you know, mean, capital providers like yourselves, you know, when you look at a P &L that's somewhat lumpy,
Guy: Right.
Guillaume Clairet: You know, it's, it's scary, but, when you look at like, you know, a portfolio of 50 contracts that have, know, 25 plus years terms and, and, and that I have a proven track record of delivering on the bottom line that that's, that's amazing value and that's stabilized value. So I think that this is where I'd like us to be in five years and, and along the line, along the way, continue to also add what I call tuck ins, right? Like we, we, we've been known to successfully integrate.
Guy: Thank
Guillaume Clairet: technology companies within the portfolio. We just completed the llama acquisition, like a solid suspension in Spain. So that's going to continue because we're talking about the standard toolkit early on in the conversation. That toolkit, it's important to have a strong one, one that you know, you control, that you can plug in the pieces. So being a technology powerhouse is not something we'regoing to forget. We need that to be differentiated, to be...
Guy: Yep, congrats, Terry. I just saw that.
Guy: Mm-hmm.
Guillaume Clairet: able to deliver the best solutions out there, the most efficient ones, the most cost effective ones. So that's going to continue. But as we scale up the water hub and water infrastructure side of things, that's who we want to be. Sometimes we've been described as doing too many things. In fact, we want to do two things. We want to do technology powerhouse, and we want to build a decentralized utility powerhouse where we own and operate assets.
Guy: No, that, yeah.
Guy: Yeah, that makes a ton of sense and how you're better at both by having that deep understanding on both sides, right? Both the technology side is also what it takes to operate over time. So love it and excited for the path ahead. Well, want to be respectful of your time here as we get to wrap it up. Would love to hear a piece of advice for someone wanting to build a career in
solving water issues, right? Been in the industry 20 plus years and working on all these incredible projects and working with great people along the way. Any piece of advice that you might offer for folks trying to get into the water space?
Guillaume Clairet: Yeah, that's a question. mean, feel that, funnily enough, I, the ones that want to enter the water, water spaces is open so people can come in. Right. So, so the, real question is how do you, how do you grow and have an interesting career in, in, the water space? So I would say, and I would vouch that if you get involved in themes,
Guy: Mm-hmm. Yep.
Guillaume Clairet: of unconventional water sources, right? So water reuse is unconventional. Desalination is unconventional. I think you'll be intellectually challenged and you're going to fall on the right trends that are going to propel you to great levels of career progression, if you like. So because
Entering is easy. You could enter from high school, take, as I said, there's not enough, there's a shortage of staff. So entering is making a difference is the hard part. that would be my advice. Focus on unconventional sources, whether it's a project, whether you operate something. It's more complex, it's new, there's less of those out there than there's the traditional lagoons that we've been implementing all over the US, unfortunately, 20 years ago.
Guy: Sure, Great.
Guy: Mm-hmm.
Guy: Mm-hmm. Mm-hmm.
Guillaume Clairet: And you're going to be changing society by going towards those type of projects, those types of fields, a trend of conventional supplies. That'd be my advice to the younger folks coming in our industry.
Guy: that makes a ton of sense to me. So, you know, good words for the folks trying to break in. Obviously, the opportunities is massive and tons of ways to work on incredibly interesting projects. And then now for a favorite closing question. What is something you are particularly grateful for either about your team, your work or more broadly?
Guillaume Clairet: That one is easier. I mean, for me, I'm incredibly proud and thankful to our team for the culture that we've put together. I think, you know, sometimes businesses define, you know, what'syour secret sauce? know, what's your competitive advantage? And, you know, it may sound cheesy, but I really believe that it's our culture in our case. We've built something very special. And sometimes, you know, welcome out conferences and, you know, competitors or clients or...
partners, vendors will come to us and say like, know, yeah, working with you guys is different. You have such a unique culture. And so I'm really thankful that all the people that have joined us and stayed with us. I mean, we have some really, really loyal guys, you know, the team is pretty incredible. And I think that is because we all share a common culture, you know, across boundaries, you know, we've got more people in the U than anywhere else by far, you know, more than
60 % of our workforce in the US. We've got a big presence in Canada, UK, Spain, Chile, Mexico, but there's one thing that is quite common everywhere and is a strong culture of care, of communication, of celebration, and of wanting to win and wanting to make a difference. And that really, I'm thankful for that to all of my team. And so, yeah.
Guy: That is fantastic to hear and I'm both super grateful to you and your team on their efforts very clearly.
Guillaume Clairet: Hey, thank you guys for having me.
Guy: and exciting times ahead. So, Dionne, thank you again for sharing and look forward to tracking the wonderful progress that it seems is ahead. And thank you for helping us all get much smarter about the impact that you're having and opportunities to make broader impact in the water space.
Guillaume Clairet: Yeah.
Guillaume Clairet: Yeah, well, thanks for your time. I really enjoyed it. So see you around. Cheers,
Guy: Cheers. Pleasure.
Guy: If you enjoyed this week's podcast, please leave us a rating and review on Apple and Spotify. It really helps us reach more listeners. You can also let us know what you thought via Twitter at ClimatePOSIpod, or email us at climate positive@hasi.com. I'm Guy Van Syckle and this is Climate Positive.