Five Companies Commit to Buying Carbon Removal Technology

STRIPE, Alphabet, Shopify, Meta and McKinsey Sustainability today or Monday (18/4) are launching Frontier, an advanced market commitment (advance market commitment or AMC) to accelerate the development of permanent carbon removal technologies.

The five companies are planning a commitment of US$ 925 million (over Rp. 13.28 trillion) over the next 9 years to purchase permanent carbon removal technologies from promising new solution providers.

Frontier aims to show researchers, entrepreneurs and investors the potential market for carbon removal technologies.

A decade ago, the AMC model succeeded in accelerating the development of a pneumococcal vaccine for low-income countries and saved about 700,000 lives.

This is the first time this model has been applied to large-scale carbon removal.

Radical emission reductions are critical to avoiding the worst impacts of climate change.

However, according to a recent report from Intergovernmental Panel on Climate Change, there is no way to keep global temperature rise below 1.5 degrees Celsius per year without permanently removing gigatons of CO2 in the atmosphere and oceans.

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Carbon removal technology has made significant progress, but it is still not enough to reach the required scale.

By 2021, less than 10,000 tonnes of carbon dioxide have been permanently removed from the atmosphere using similar technologies.

The IPCC model requires around 6 billion tonnes of CO2 removal annually until 2050 to reach the 1.5 degree Celsius target.

Frontier AMC is designed to support and encourage the industry to develop this technology as soon as possible.

How Frontier works

Frontier performs due diligence and facilitates the purchase of carbon remover on behalf of the buyer, in two types:

First. For early-stage carbon removal providers piloting new technologies, the buyer will sign a low-volume pre-purchase agreement.

SecondFor carbon removal providers who are in the growth stage and who are scaling up their technology, Frontier will facilitate the agreement offtake between individual buyers and providers.

This agreement promises to purchase tons of carbon removers in the future when they are ready to ship, allowing providers to secure financing to scale up deployments.

When tons of CO2 are removed, the carbon removal company receives a payment, and the tons of carbon removal are given back to the buyer.

Frontier will identify the technologies with the greatest long-term potential and will help them scale through purchasing, as well as ongoing advice and support.

In practice, this may mean paying a higher initial price per tonne to accelerate technology that meets certain criteria, including:

  • Permanent: Permanent carbon storage (>1000 years)
  • Carbon physical footprint: Utilize carbon sinks that are not too constrained by arable land
  • Cost: Has a path to affordable scale (< 100 US dollars/ton)
  • Capacity: Have a path to become a meaningful part of our portfolio of carbon removal solutions (>0.5gt/year)
  • Environmental justice: Ensuring meaningful environmental equity, equitable distribution of a healthy and clean environment, through robust processes that focus on local community involvement

As a wholly owned subsidiary of Stripe, Frontier will also be funded by the tens of thousands of businesses that purchase carbon-removal technology through Stripe Climate.

This will make Frontier the world’s largest carbon removal buying coalition by funding and membership.

Nan Ransohoff, Head of Climate, Stripe, said,“With Frontier, we want to send a strong message to entrepreneurs, researchers and investors that the market for permanent carbon removal is available: get up and we’ll buy it.”

Kate Brandt, Chief Sustainability Officer, Google,“Our long experience in driving climate solutions has helped us at Alphabet to know firsthand that informing the market for carbon removal technologies can spur innovation to produce products that are affordable for everyone.’

“That’s why we are joining this coalition of climate leaders and together seeing the potential of new carbon removal technologies and sending a clear signal of demand to the market,” said Brandt.

Stacy Kauk, Head of Sustainability, Shopify, said, “Our commitment has been very clear since we launched Sustainability Fund in 2019: Join us. Climate change can only be solved if we unite, and that is what we are doing through this advanced market commitment. “

“The message we are conveying through Frontier is in line with what the next steps for the carbon removal market need to be,” he added.

Peter Freed, Head of Energy Strategy, Meta, says,“We are committed to achieving net-zero emissions (net zero emissions) across our value chain by 2030 through new partnerships and innovative solutions for emission reductions and carbon removal.”

“Frontier is an important step to help accelerate the development and adoption of carbon removal technologies for a more sustainable world,” said Freed.

Dickon Pinner, Senior Partner and Co-leader of McKinsey Sustainability, said, “Achieving net-zero emissions is key to building environmental resilience and creating a future that delivers sustainable and inclusive growth. “

“Carbon removal has a very important role. Our research shows that the rate of carbon removal needed by 2025 to reach the 1.5°C target set by the IPCC will be 80% off, based on the current project path,” he explained.

“Frontier will play a catalytic role in driving a high-quality supply of carbon removal,” said Pinner.

Peter Reinhardt, CEO and Co-Founder, Charm Industrial, said. “Customers are critical to scaling any business; to date there has been little attention to carbon removal. “

“This commitment is a strong signal that there will be a market for what we are building at Charm. It will make it easier to measure business growth, raise funds, and most importantly, lower costs faster,” he explained.

Susan Athey, Professor of Economics, Stanford GSB, said, “AMC for pneumococcal vaccine saved nearly a million lives by creating certainty about future demand and accelerating development.”

“Frontier can play a similar role: initiating investments in carbon removal by convincing entrepreneurs and investors that their investment will return,” he said. (RO/OL-09)

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