Stripe, with funding from Alphabet, Meta, Shopify, and McKinsey, launched Frontier, which plans to invest $925 million in carbon removal technologies over the next decade. By opening the opportunity to market, tens of thousands of businesses already using Stripe Climate can automatically direct a fraction of their revenue on Stripe to these carbon removal technologies.
For decades, there has been interest in carbon capture and storage, which plays an important role in many pathways to net zero 2050. Yet the technology has struggled to be commercialized, the cost of the technology and concerns about leaks delaying its development. In 2021, less than 10,000 tonnes of carbon dioxide have been permanently removed from the atmosphere, which is 1 million times less than the annual scale needed. Today, it is replaced by the idea of carbon capture and utilization, where technology transforms carbon dioxide into useful materials and products.
The recently released Sixth IPPC Assessment Report warned that action on emissions must be taken now if the 2050 net zero targets are to be met. targets, as a means of neutralizing emissions in hard-to-reduce sectors such as cement and steel. The Science Based Targets Initiative (SBTI) Net Zero Standard calls for the 5-10% of emissions that companies cannot improve to be eliminated either through carbon removal or nature-based solutions rather than by clearing, so the launch of Frontier suggests a potential boom. in carbon removal.
One of the challenges to the development of carbon markets has been uncertainty about long-term demand and unproven technologies, which is particularly relevant for carbon removal. Frontier is an Advanced Market Commitment (AMC) that will secure future demand for carbon removal technologies, removing market uncertainty. Buyers will decide how much they want to spend on carbon removal each year between 2022 and 2030. Frontier will then aggregate these commitments to define a total annual demand pool, while suppliers will apply to be considered under the framework. regular bidding processes. By securing a pool of demand, start-ups whose approach is accepted will see a significant element of technological risk removed, which underlies an opportunity to raise significant development funds.
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 approximately 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 process of mineralization and is permanently embedded. Another industry with a high carbon footprint is steel, as carbon is needed in the steelmaking process and accounts for around 8% of annual global emissions. Boston Metal has developed an electrolysis process to make steel by using direct electric current to separate the chemical components, resulting in a pure liquid metal that can be shaped without needing to be reheated. There are other technologies, such as enhanced rock weathering (ERW) that are at an 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 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 the weathering of minerals by mixing silicate rocks into the ground, and where CO2 ends up in the ocean in the form of bicarbonate; and Sustaera, which has its own direct air capture technology. To date, more than 15,000 companies in 40 countries have joined to allocate funds for carbon elimination through Stripe Climate. In fact, Stripe Climate funded nearly 10% of Climeworks’ new direct air capture plant.
The difficulty with carbon removal is the question of how scalable the technology is. Estimates suggest that up to 6 billion tonnes of CO2 will need to be removed to meet the 2050 targets. Questions also remain around issues such as affordability, permanence of CO2 removal, usage requirements of land and of course the contribution to overall net reductions. The launch of Frontier, however, could be the first step in answering these questions.