Major Technology Companies To Provide Nearly $1 Billion Building Market Demand For CO2 Removal

Stripe, with funding from Alphabet, Meta, Shopify and McKinsey, has launched Frontier, which plans on investing $925 million in carbon removal technologies over the coming decade. Opening the opportunity to the market, tens of thousands of companies already using Stripe Climate can automatically direct a fraction of their revenue on Stripe toward these carbon removal technologies.

For decades there has been interest in carbon capture and storage, with it playing a significant role in many pathways to net zero 2050. Yet the technology has struggled with commercialisation, with the cost of technology and concerns about leakage delaying its development. As of 2021, less than 10,000 tons of carbon dioxide has been permanently removed from the atmosphere – 1 million times short of the annual scale needed. Today it is being replaced by the idea of carbon capture and use, where the technology turns carbon dioxide into useful materials and products.

The recently released IPPC Sixth Assessment report warned that action on emissions must be taken now if 2050 net zero targets are to be reached. The report specifically refers to carbon capture as necessary to achieve the targets, as a way to neutralize emissions in the hard to abate sectors such as cement and steel. The Net Zero Standard from the Science Based Targets Initiative (SBTI) calls for the 5-10% of emissions that companies cannot ameliorate to be removed either through carbon removals or nature based solutions rather than offsetting, so the launch of Frontier suggests a potential boom in carbon removal.

One of the challenges to the development of the carbon markets has been uncertainty about long-term demand and unproven technologies, something particularly relevant for carbon removal. Frontier is an advanced market commitment (AMC) which will guarantee future demand for carbon removal technologies, removing uncertainty from the market. Buyers will decide how much they want to spend on carbon removal each year between 2022 and 2030. Frontier will then aggregate those commitments to set a total annual demand pool, while suppliers will apply for consideration as part of regular RFP processes. By ensuring a demand pool, start-ups whose approach is accepted will see a significant element of technology risk removed, underpinning an opportunity to raise significant development funding.

Companies developing carbon removal technologies include CarbonCure Technologies, Boston Metal and Climeworks. ClimeWorks approach is to store excess CO2 but its technology, direct air capture (DAC) is said to be able to remove CO2 from the air. CarbonCure creates technologies for the concrete industry (which uses cement, responsible for an estimated 7% of global emissions) that introduces recycled CO₂ into fresh concrete to reduce its carbon footprint without compromising performance. Once injected, the CO₂ undergoes a mineralization process and becomes permanently embedded. Another industry with a high carbon footprint is steel, as carbon is required in the steel making process, and estimated to represent around 8% of annual global emissions. Boston Metal has developed an electrolysis process for making steel using direct electric current to separate chemical components, resulting in a pure liquid metal that can be shaped without needing reheating. There are other technologies, such as enhanced rock weathering (ERW) which are at even earlier stage.

Stripe has already made commitments to carbon removal technologies. In December 2021 the company announced $6 million in carbon removal purchases from companies including: 44.01 which turns CO₂ into rock, harnessing the natural mineralization processes; Ebb Carbon which uses a proprietary electrochemical system to remove acid from the ocean and store it as oceanic bicarbonate; Eion which accelerates mineral weathering by mixing silicate rocks into soil, and where the CO2 ends up in the ocean as bicarbonate; and Sustaera, which has its own direct air capture technology. To date, more than 15,000 companies across 40 countries have joined in allocating funds to carbon removal through Stripe Climate. In fact, Stripe Climate financed nearly 10% of Climeworks’ new direct air capture plant.

The difficulty with carbon removal is the question about the extent to which the technology is scalable. Estimates suggest that up to 6 billion tonnes of CO2 will have to be removed in order to teach 2050 goals. Questions also remain around issues such as affordability, the permanence of CO2 removal, land use requirements and of course the contribution to net reductions overall. The launch of Frontier could however be the first step towards answering those questions.

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