(Bloomberg) — The fledgling $925 million carbon removal effort funded by big tech companies has started writing checks to startups aiming to get CO₂ out of the air.
The Frontier fund said Wednesday it had selected six startups to receive grants or pre-purchase agreements — essentially, advance payments for carbon removal in the future — from the fund. This is the first set of commitments from the fund, which has raised funds from Stripe Inc., Meta Platforms Inc., Alphabet Inc., Shopify Inc. and McKinsey & Co. The fund debuted earlier this year and was born from a similar carbon removal. shopping programs at Stripe and Shopify.
Many climate efforts focus on reducing emissions, but to fight climate change, carbon must also be removed from the air and stored sustainably, such as by capturing atmospheric carbon and burying it deep in the air. Earth. The technology to do this is still in its infancy and the processes are prohibitively expensive. Over time, improvements could bring volume and profitability, but for that to happen, companies trying to scale up carbon removal need a boost.
The goal of this effort is to create a market for large-scale carbon removal technology. The bulk of the $925 million is intended to pay for carbon removal once it’s completed – the so-called offtake agreements. For starters, however, the fund pays small businesses before they’ve even started. So far, only Stripe is paying for these pre-purchase deals, while other fund participants can choose whether they want to do so or wait for companies to mature.
For this first round, a panel of 19 experts screened a pool of 26 applicants and selected six companies, from the US, UK, Australia and Israel, which are focused on direct capture of air, enhanced rock weathering and synthetic biology. . Stripe will be the first customer for each of them. The payments processor has committed to spending $2.4 million to purchase the carbon removal from these six companies and has set aside an additional $5.4 million for future purchases of the same set.
Fund supervisors said they were encouraged by the diversity and creativity of the applicants, but they also recognized how tiny the current capacity for carbon removal is compared to the eventual scale needed to meet climate goals. Experts predict that by 2050, 6 billion tons of carbon will need to be removed from the atmosphere each year; so far, only about 10,000 tonnes have been mined in total. The pre-purchase agreements buy hundreds of tons each.
“On the one hand, there’s been huge momentum, and at the same time, there’s not enough momentum,” said Nan Ransohoff, chief climate officer at Stripe. “There’s a very big gap between those two numbers.”
Three of the companies – AspiraDAC, Calcite-Origen and RepAir – are developing direct air capture technology, which uses machines to filter CO₂ from the air. These new methods include some options for using electricity rather than heat during the process, which would eventually allow the capture to be powered using renewable sources. Two others – Travertine and Lithos Carbon – find ways to speed up the natural process by which weathering of minerals captures carbon dioxide from the air. And a final company, Living Carbon, is receiving a research and development grant to synthesize an algae component to sequester CO₂.
The fund will select another set of companies to buy in the fall. The hope is to send a clear message to anyone considering founding a startup to tackle this problem: if you build something promising, you will have buyers. Ransohoff hopes the missive will be received quickly, even though the technology takes several years to develop before it can remove significant amounts of carbon from the air. “I think it’s unrealistic for everyone to start seeing huge volume in the next few years,” she said. “We have to be both patient and impatient.”
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