Stripe, with funding from Alphabet, Meta, Shopify and McKinsey, has launched Frontier, which plans to invest $925 million in carbon removal technologies over the next decade. Opening up the opportunity to the market will allow tens of thousands of companies already using Stripe Climate to automatically spend a fraction of their revenue on Stripe on these carbon removal technologies.
For decades there has been interest in carbon capture and storage, playing a major role in many pathways to net zero 2050. Yet the technology has struggled with commercialization, with the cost of technology and concerns about leakage slowing its development. As of 2021, less than 10,000 tons of carbon dioxide will be permanently removed from the atmosphere — 1 million times less than the annual scale needed. Today it is being replaced by the idea of capturing and using carbon, where technology converts carbon dioxide into useful materials and products.
The recently released IPPC Sixth Assessment report warned that action must now be taken on emissions to achieve the net-zero targets for 2050. The report specifically refers to carbon capture as necessary to meet the targets, as a way to neutralize emissions in hard-to-reduce sectors such as cement and steel. The Science Based Targets Initiative (SBTI)’s Net Zero Standard calls for removing the 5-10% of emissions that companies cannot improve, either through carbon removal or nature-based solutions rather than offsetting, thus the launch of Frontier suggests a potential boom in carbon removal.
One of the challenges for the development of 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) that will ensure future demand for carbon removal technologies and remove uncertainty in 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 establish a total annual demand pool, while suppliers will apply to be considered 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 disappear, providing the opportunity to attract significant development funding.
Companies developing carbon removal technologies include CarbonCure Technologies, Boston Metal and Climeworks. ClimeWorks’ approach is to store excess CO2, but the technology, direct air capture (DAC), would be able to remove CO2 from the air. CarbonCure creates technologies for the concrete industry (which uses cement, which is responsible for an estimated 7% of global emissions) that introduce 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 needed in the steelmaking process and is estimated to account for about 8% of annual global emissions. Boston Metal has developed an electrolysis process to make steel using direct electrical current to separate chemical components, resulting in a pure liquid metal that can be formed without having to be reheated. There are other technologies, such as Enhanced Rock Weathering (ERW), which are at an even earlier stage.
Stripe has already made commitments on carbon removal technologies. In December 2021, the company announced $6 million in carbon removal purchases from companies, including: 44.01 that turns CO₂ into stone, leveraging its natural mineralization processes; Ebb Carbon which uses a patented electrochemical system to remove acid from the ocean and store it as oceanic bicarbonate; Eion that accelerates mineral weathering by mixing silicate rocks into the soil and releasing the CO2 into the ocean as bicarbonate; and Sustaera, which has its own direct air capture technology. To date, more than 15,000 companies in 40 countries have joined in allocating carbon removal funds through Stripe Climate. Stripe Climate even financed almost 10% of Climeworks’ new direct air capture installation.
The difficulty in removing carbon is the extent to which the technology is scalable. Estimates suggest that up to 6 billion tons of CO2 will need to be removed to learn 2050 targets. Questions also remain about issues such as affordability, the sustainability of carbon removal, land use requirements and of course the contribution to overall net reductions. However, the launch of Frontier could be the first step to answer those questions.