Stripe, Alphabet, Meta, Shopify, McKinsey spur the carbon capture market

Pods, powered by Carbfix, containing carbon dioxide storage technology underground, in Hellishheidi, Iceland, Tuesday, September 7, 2021. Startups Climeworks AG and Carbfix work together to store carbon dioxide removed from the air deep underground to reverse some of the damage CO2 emissions do to the planet. Photographer: Arnaldur Halldorsson / Bloomberg via Getty Images

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Online payment technology provider Stripe is teaming up with several other companies, including Google’s parent company Alphabet and Facebook parent company Meta, to commit nearly $ 1 billion to spur the CO2 capture market.

On Tuesday, the companies announced the creation of Frontier, which plans to buy $ 925 million in permanent carbon removal from companies that develop the technology over the next nine years.

Frontier will be a wholly owned subsidiary of Stripe. Alphabet, Meta, the e-commerce platform Shopify and the consulting giant McKinsey are investing – and commit to buying some of the CO2 capture solutions.

Stripe will also provide customers with Frontier through their Stripe Climate program, which enables online salespeople using the company’s platform to devote a portion of their sales to carbon offsets.

The goal of the investment is to put a turbo on the burgeoning industry.

The UN Intergovernmental Panel on Climate Change has estimated that in order to limit global warming to 1.5 degrees Celsius above pre-industrial levels, an average of 6 billion tonnes of carbon dioxide must be removed from the atmosphere each year by 2050. Fewer than 10,000 tonnes of carbon dioxide have been trapped date.

The Frontier initiative suggests that momentum is beginning to build in space.

“Sentiment is changing in terms of both carbon capture and carbon dioxide removal,” said Julio Friedmann, chief researcher at Carbon Direct, which invests in and advises companies on solutions for cFarbon removal.

“This is changing in part because we are not succeeding with the climate at the speed and scale required,” Friedmann said. “In short, we’re failing and we need a bigger boat – one that includes all serious mitigation options.”

The IPCC’s sixth assessment report, released on April 4, specifically mentioned the importance of carbon capture, saying that it is “necessary to achieve net zero CO2 and greenhouse gas emissions both globally and nationally, which outweighs” difficult to reduce “residual emissions,” the report said.

Frontier development is, among other things, corporate and government initiatives that are sinking billions into technology.

For example, the Swiss carbon sequestration firm Climeworks raised a $ 650 million equity round on April 5. And in the US, the bipartisan infrastructure law $ 3.5 billion included direct investment by the federal government in carbon capture technologies, while both the UK and the EU have committed to capture 5 million tonnes of carbon dioxide a year.

Financing to make the flywheel turn

The advanced funding model for market engagement was used to develop pneumococcal vaccines for low-income countries in 2009. A group of funders collaborated with Gavi, UNICEF and the World Bank to market $ 1.5 billion in procurement to stimulate the development of the vaccines. That AMC helped vaccinate millions of children.

But this is the first time the model has been used to fund large-scale carbon removal technologies.

Frontier’s task will be to collect financial obligations from companies and governments that want to purchase CO2 capture solutions to meet their net zero promises, examine the suppliers of these solutions and then pay the suppliers once the solutions are delivered.

The group plans to release more details on where it will spend the money later in the year. Companies will be selected if their technologies can store carbon for more than 1,000 years, have a path to being affordable in scale – defined as less than $ 100 per. tons in 2040 – and has a way to remove more than half a gigaton of carbon by 2040 among other factors.

The Frontier news was applauded by Facebook’s former chief technology officer Mike Schroepfer, who recently announced he would spend his time fighting climate change.

“This is big and I’m super proud Meta is a launch partner, “Schroepfer said on Twitter.” Even the most conservative climate models say we need to take carbon dioxide out of the atmosphere to ward off the worst of the climate crisis. There are a lot of cool technologies out there, but they do not have a market for their product. “

However, not everyone sees the focus on carbon removal technologies as a good thing.

“Honestly, I really wish the same companies invested the same amount in clean energy solutions,” Michael E. Mann, a professor of atmospheric science at Penn State, told CNBC. “As I discuss in ‘The New Climate War’, there is no evidence that carbon offsets can be implemented on the scale needed to make a dent in global carbon emissions in the time frame needed,” said Mann, who is also director of the Penn State Earth System Science Center (ESSC).

Globally, carbon emissions must be reduced by 50% this decade, Mann said.

Carbon capture “could play a role later along the way, but for now, a rapid and dramatic transition away from fossil fuels to renewable energy is needed,” he said.

“The current Russian invasion of Ukraine, made possible by Europe’s dependence on their gas and oil, is a reminder of the continuing dangers of our dependence on fossil fuels,” Mann told CNBC. “What we need is to solve this problem at its source, not to apply plasters at the edges.”

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