These tech companies are accelerating permanent carbon removal to save the planet

0

In 2020, Shopify’s sustainability fund purchased 400 tons of stored carbon from Heirloom, a company testing and refining technology to accelerate a natural process called carbon mineralization. During this process, carbon dioxide in the atmosphere binds to minerals and permanently turns to stone; Heirloom’s goal is to make this happen in days instead of years.

“Since our purchase, they have dramatically improved the rate of carbon capture using limestone, which helped them unlock their latest Series A funding round, where they successfully raised $53 million,” explained Stacy Kauk. , Head of Sustainability at Shopify.

Today, Heirloom is poised to further expand its innovative carbon capture solution as recent progress allows it to qualify to sell its carbon credits to Frontier, an Advanced Market Commitment (AMC) that invests nearly a billion dollars in accelerating development and growth. technological solutions to reduce or eliminate carbon on an unprecedented scale.

AMCs are funding mechanisms that have been used to incentivize vaccine development in cases where a lucrative market for the life-saving product did not already exist and may never exist. In the case of carbon capture, a similar market gap exists, and the AMC Frontier essentially promises that there will be buyers waiting once companies advance their technology and scale.

It has the potential to develop a market for carbon removal, a practice that climate scientists say will be needed to tackle climate change.

Frontier was launched this spring by a group of mainly tech companies: alongside Shopify are Stripe, Alphabet, Meta, and McKinsey. Each company has been active on climate issues and Frontier is creating a way to bring together one aspect of their initiatives.

“With Frontier, we want to send a strong demand signal to entrepreneurs, researchers and investors that there is a market for permanent carbon removal: build and we will buy,” said Nan Ransohoff, chief climate officer at Stripe, who is at the forefront of the initiative, in an April press release.

Like Shopify, Stripe was already investing in carbon removal through Stripe Climate, but the technologies are incredibly expensive. By pooling their resources and continuing to bring in new players, the companies hope to more meaningfully move the needle on climate change while offsetting their own emissions.

The need for carbon removal

Top climatologists agree that a rapid global transition from fossil fuels to renewable energy is the most critical step to avoid catastrophic climate consequences. Yet, due to the amount of greenhouse gases that have already been released into the atmosphere, this change alone will not be enough without also removing existing carbon dioxide from the atmosphere. In the latest assessment by the Intergovernmental Panel on Climate Change (IPCC), experts called carbon dioxide removal “a critical component of scenarios that limit warming to 1.5°C or likely below 2°C by 2100”.

“Carbon removal is no substitute for deep decarbonization,” said Peter Minor, director of science and innovation at Carbon 180, a nonprofit carbon removal technology advocacy group. “But there’s no world where we can have the life we ​​love to live without also developing this elimination technology, and at scale.”

Nature-based sequestration projects such as forest preservation are one way to remove carbon from the atmosphere, but they are imperfect. Critics have noted that some companies are using these projects as a way to offset carbon emissions rather than lessen their carbon footprint. Offsets also often have a limited impact: during a recent episode of Last week tonight John Oliver identified forests that had been counted as offsets even though they had never been threatened. In California, wildfires are destroying thousands of acres of forests previously considered carbon credit stores, releasing all that carbon into the air.

Kauk said those very issues caused Shopify to go down its current path of funding more reliable and permanent carbon removal and storage. There are criticisms, primarily that efforts like Frontier will distract attention and starve funding from the more urgent need to reduce fossil fuel use and switch to renewable energy. Additionally, carbon capture technologies are energy intensive, so some fear they will never be viable.

Frontier evaluates its projects on the basis of eight criteria. The carbon must be stored for at least 1,000 years, and the technology cannot create more emissions than it removes. Projects must also demonstrate a way to store carbon for less than $100 a ton, the threshold the founders determined will allow a technology to be cheap enough to scale.

Frontier’s portfolio of projects so far includes AspiraDAC and RepAir, two companies working on modular direct air capture (DAC) systems powered by renewable energy, and other companies working on carbon mineralization. , notably Travertine and Calcite-Origen.

No existing market

Cost and scale are where the rubber meets the unpaved road. While the solar industry needed to reduce the cost of its systems before it could compete with oil and gas, there was still a market for electricity, Minor said. With the elimination of carbon, which is essentially a public good, such a market does not exist.

“We don’t think about how picking up our recycling every week makes money, we do it because it’s good for our society. Carbon removal lives in a very similar world,” he said. “How then do we create the right incentives for companies to be able to raise funds effectively, invest in the development of new technologies that we will need to make carbon removal work, and then convince financiers and buyers of the project to actually pay for it?”

That’s where Frontier’s design as an AMC comes in. The model was applied in the early 2000s to stimulate the development and distribution of an affordable pneumococcal conjugate vaccine for low-income countries. Because countries couldn’t pay much for vaccines, there was no incentive for companies to manufacture them.

Then five countries and the Gates Foundation committed $1.5 billion to an AMC, essentially promising companies that if they developed a product that met specific criteria, they would buy it. Analyzes estimate that the AMC saved 700,000 lives.

“An AMC is particularly good when you really want to get people to high production with low marginal cost, and that’s absolutely true of vaccines and this carbon capture technology,” said Rachel Glennerster, an economist at the University of Chicago who worked on the development of the AMC approach to vaccines and who advised Frontier. “AMC says, ‘We guarantee you’ll have a big market, so it’s worth the investment to produce on a massive scale.'”

Compared to what we see even two or three years ago, this is a meteoric acceleration in the amount of existing market capital flowing into the space.

—Peter Minor, Director of Science and Innovation, Carbon 180

AMCs also encourage speed, Glennerster noted, and the climate crisis demands urgency. And, because companies don’t pay in full until the technology works well enough to capture carbon, there’s less investment risk. Frontier’s model requires pre-purchases to help projects, many of which are started by startups, get the initial capital they need to grow.

Another key distinction is that Frontier is a private company, whereas the vaccination effort has been driven by foundations and governments. Kraus said the initial commitment of $925 million is a “very strong demand signal” for carbon removal companies that there is and will be a market for their product, and that there is aims to entice more investors and governments to participate in building the market.

This has already happened to some extent. In May, the US Department of Energy announced $3.5 billion to set up direct air capture centers across the country. In July, the UK announced an investment, structured as an AMC, of ​​around $63 million for innovative carbon removal projects.

Minor said he thinks Frontier is already making an impact in the space, in terms of its own investment and signaling to others. “Compared to what we see even two or three years ago, this is a meteoric acceleration in the amount of existing market capital flowing into the space,” he said.

The amount of carbon these projects can capture at their current scale is so small that Frontier couldn’t even spend its $925 million on it. But Kraus is confident that development will happen quickly. She expects that as the 2030 deadline approaches and more carbon is stored and therefore available for purchase, the company will attract additional businesses and increase its engagement.

“The more we can do to stack demand through Frontier, the better it will be for the ecosystem,” she said. “We need to bring in these other buyers so we can ramp up.”

Share.

Comments are closed.