In the year In 2020, the Shopify Sustainability Fund purchased 400 tons of stored carbon from the Heirloom Company, a natural process called carbon mineralization in the process of research and fine-tuning technology. In that process, the carbon dioxide in the atmosphere combines with minerals and turns them permanently into stone; Heirloom’s goal is to make it happen in days rather than years.
“Since our acquisition, they have significantly improved the speed at which they can demonstrate carbon sequestration using limestone, and this has enabled them to open their latest Series A funding round, raising $53 million,” explains Stacey Kauk. , Shopify’s head of sustainability.
Now that Heirloom is eligible to sell its carbon credits to Frontier, Heirloom is poised to further develop its innovative carbon capture solution to sell nearly $1 billion in market commitments (AMC) to accelerate its development and growth. Technology-based solutions to capture or remove carbon on an unprecedented scale.
AMCs are funding mechanisms used to encourage vaccine development at a time when there was not, and may never be, a profitable market for a life-saving product. When it comes to carbon capture, there’s a similar market gap, and Frontier AMC promises that there will be buyers waiting for companies to develop and grow their technology.
It has the potential to set up a market for carbon emissions, which climate scientists say is essential to combating climate change.
Frontier was launched this spring by a group of mostly tech companies: alongside Shopify are Stripe, Alphabet, Meta and McKinsey. Each company is actively involved in climate issues, and Frontier creates a way to bring an aspect of their activities.
“With Frontier, we want to send a strong signal to entrepreneurs, researchers and investors that there is a permanent market for carbon removal, that we will build and buy,” said Nan Ransohoff, Strip’s chief climate officer. Initiative, in April press release.
Like Shopify, Stripe has been investing in carbon mitigation through Stripe Climate, but the technologies are incredibly expensive. By pooling their resources and continuing to bring in new players, the companies hope to move the needle on climate change more meaningfully by offsetting their own emissions.
The importance of carbon removal
Top climate scientists agree that a rapid transition from fossil fuels to renewable energy is the most critical step in preventing catastrophic climate impacts. However, given the amount of greenhouse gases already being released into the atmosphere, that change alone will not be enough if you don’t remove the existing carbon dioxide from the atmosphere. In its latest assessment, the Intergovernmental Panel on Climate Change (IPCC) called carbon dioxide removal “an important part of the scenario that could limit warming to 1.5°C or below 2°C by 2100.”
“Carbon removal is not a substitute for deep carbonization,” said Peter Manar, director of science and innovation at Carbon180, a carbon removal technology nonprofit. But there is no world we can live in without developing this removal technology and living at a higher level.
Nature-based projects like forest conservation are one way to remove carbon from the atmosphere, but they are imperfect. Critics say some companies use these projects as a way to reduce carbon emissions. Reparations also often have a limited impact: in the near term Last week tonight, John Oliver identifies forests that are considered compensatory even though they are not under threat at all. In California, wildfires are destroying thousands of acres of forests that were previously considered carbon credit stores, releasing carbon into the atmosphere.
Kauk said those very issues pushed Shopify down its current path of funding more reliable, permanent carbon removal and storage. There are criticisms, mainly that efforts like Frontier distract attention and distract from the need for subsidies to cut fossil fuel use and shift to renewables. In addition, carbon capture technologies use so much energy that some worry they may never become practical.
Frontier evaluates its projects against eight criteria. Carbon must be stored for at least 1,000 years, and the technology cannot create more emissions than it destroys. The projects must demonstrate how they can store carbon for less than $100 per ton.
To date, Frontier’s portfolio of projects includes AspiraDAC and RepAir, two modular direct air capture (DAC) renewable energy companies, and other companies working on carbon mineralization, including Travertine and Calcite-Origin.
There is no existing market.
Cost and balance is where the rubber meets the road not yet built. While the solar industry has had to lower the cost of its systems before it can compete with oil and gas, it has always been a market for electricity, Miner said. In carbon sequestration, which is essentially a public good, no such market exists.
We don’t think about how recycling makes money every week, we do it because it’s good for our community. Decarbonisation lives in a very similar world,” he said. “How can you create the right incentives for companies to raise money efficiently, invest in the new technologies we need to make carbon removal work, and convince project financiers and buyers to pay properly?”
That’s where Frontier Design comes in as AMC. The model was implemented in the early 2000s to promote the development and distribution of an affordable pneumococcal conjugate vaccine to low-income countries. Because countries couldn’t afford to pay more for the vaccine, there was little incentive for companies to do so.
Five countries and the Gates Foundation then gave $1.5 billion to AMC. Analyzes estimate that AMC saved 700,000 lives.
“AMC is especially good when you want to move people toward high output at low cost, and that’s absolutely true of vaccines and carbon-capture technology,” said Rachel Glennerster, an economist at the University of Chicago. AMC’s approach to vaccines and who advised Frontier. “AMC is saying, ‘We guarantee you’ll have a big market.’
Compared to what we were seeing even two or three years ago, this is a rocket ship acceleration into space at the current market cap rate.
– Peter Little, Director of Science and Innovation, Carbon 180
AMCs encourage speed, Glennster said, and the climate crisis requires urgency. And because companies don’t make full payments until the technology works well enough to capture carbon, there’s less investment risk. Frontier’s model requires certain upfront purchases to obtain the early capital needed to develop the projects.
Another key difference is that Frontier was a private enterprise, while the vaccine effort was led by foundations and governments. Krause said the initial commitment of $925 million is a “very strong signal of interest” from carbon removal companies that there will be a market for their products and to encourage more investors and governments to get involved in building the market.
That is already happening to some extent. In May, the U.S. Department of Energy announced $3.5 billion to build direct air production centers around the country. In July, the UK announced a similar investment to the AMC, about $63 million for innovative carbon removal projects.
Minor said he thinks Frontier is already making an impact in the space, both through its own investment and as a signal to others. “Compared to what we were seeing even two or three years ago, this is a rocket ship rate of market capitalization going into space,” he said.
The amount of carbon these projects can capture at their current level is so small that Frontier can’t even spend $925 million on it. But Krause is confident that development will happen quickly. As the 2030 deadline approaches and more carbon stock is stored and available for purchase, the award will attract more companies and increase commitment.
“The more we can do to sort demand across the frontier, the better for the ecosystem,” she says. “We need to bring in those other buyers so we can accelerate.”
