In 2020, Shopify’s Sustainability Fund purchased 400 tons of carbon stock from Heirloom, a company that is in the process of testing and refining technology to accelerate a natural process called carbon mineralization. In the process, carbon dioxide in the atmosphere binds to minerals and permanently turns into rock; Heirloom’s goal is to make it happen in days instead of years.
“Since our purchase, they have greatly improved the rate at which they can demonstrate carbon capture with limestone, and that allows them to unlock their latest Series A funding round, where they made $53 million,” explains Stacy Kauk, Shopify’s Head of Sustainability.
Now, Heirloom is poised to expand its innovative carbon capture solution even further, as recent progress means it may be eligible to sell its carbon credits to Borderan advanced market commitment (AMC) is putting nearly $1 billion into driving the development and growth of technology-based solutions to reduce or eliminate carbon on an unprecedented scale.
AMCs are funding mechanisms that have been used to incentivize vaccine development in situations where a lucrative market for a life-saving product — and likely never will — exists. In the case of carbon capture, a similar market gap exists, and Frontier AMC essentially promises that there will be buyers waiting as companies improve their technology and scale.
It has the potential to develop a market for carbon removal, a practice that climate scientists say will be necessary to combat climate change.
Frontier was launched by a bunch of mostly tech companies this spring: Besides Shopify, there are Stripes, AlphabetMeta and McKinsey. Each company has been active on climate issues, and Frontier created a way to bring an aspect of their initiatives together.
“With Frontier, we wanted to send a big demand signal to entrepreneurs, researchers and investors that there is a market for permanent carbon removal: build and we buy,” said Head of Division Stripe’s Climate Nan Ransohoff, said the initiative’s frontrunner, one April Press Release.
Like Shopify, Stripe has invested in decarbonizing through Stripe Climate, but the technology is incredibly expensive. By pooling their resources together and continuing to attract new players, companies hope to more meaningfully turn around climate change while offsetting emissions. theirs.
The need to remove carbon
Leading climate scientists agree that a rapid global transition from fossil fuels to renewable energy is the single most important step to avert catastrophic climate outcomes. However, given the amount of greenhouse gases already released into the atmosphere, that change will not be enough without removing existing carbon dioxide from the atmosphere. In Latest reviews from the Intergovernmental Panel on Climate Change (IPCC), experts call carbon dioxide removal “an essential element of scenarios that limit warming to 1.5°C or possibly below 2°C by 2100.”
“Carbon removal is not a substitute for deep decarbonisation,” said Peter Minor, director of science and innovation for Carbon 180, a nonprofit advocacy group for carbon-removal technology. “But there’s no world where we can have the lives we love to live without actually developing this removal technology and at scale.”
Nature-based sequestration projects like forest conservation are one way to remove carbon from the atmosphere, but they’re far from perfect. Critics have noted that some companies use these projects as a way to offset their carbon footprint rather than reduce their carbon footprint. Disparities also often have limited impact: For a recent episode of Last week Tonight, John Oliver identified forests that were considered clearing even though they were never threatened. In California, Wildfires are ravaging thousands of acres of forest were previously considered carbon credit reserves, releasing all that carbon into the air.
It was those issues, Kauk said, that prompted Shopify to start on its current path to funding more reliable, permanent carbon removal and storage. Have criticism, mainly that efforts like Frontier will distract and deprive funding from an urgent need rather than cutting fossil fuel use and switching to renewables. In addition, carbon capture technology use a lot of energyso some worry that they will never be viable.
Frontier evaluates its projects based on eight criteria. Carbon must be stored for at least 1,000 years and the technology cannot produce more emissions than it emits. Projects must also demonstrate a path to being able to store carbon for less than $100/ton, a threshold the founders have determined will allow a technology that is cheap enough to scale.
To date, Frontier’s portfolio of projects includes AspiraDAC and RepAir, two companies working on renewable energy-powered modular direct air capture (DAC) systems, and others. are working on carbon mineralization, including Travertine and Calcite-Origen.
There is no current market
Cost and scale are where rubber meets unpaved roads. While the solar industry must reduce the cost of its system Before being able to compete with oil and gas, Minor said, there was always an electricity market. With the removal of carbon, which is essentially a public good, no such market exists.
“We don’t think about how weekly recycling makes money, we do it because it’s good for our society. Eliminating carbon lives in a very similar world, he said. “How do you create the right incentives for companies to effectively raise money, invest in the development of the new technologies we need for active carbon removal, and then convince project sponsors and buyers to actually pay for it?”
That’s where Frontier’s design comes from as an AMC. This model was adopted in the early 2000s to promote the development and distribution of affordable pneumococcal conjugate vaccines to low-income countries. Because countries can’t pay much for vaccines, there’s no incentive for companies to make them.
Then, 5 countries and the Gates Foundation committed $1.5 billion to an AMC, essentially promising companies that if they develop a product that meets specific criteria, they will buy it. Estimated analysis AMC has saved 700,000 lives.
“An AMC is especially good when you really want to drive people to high production at low marginal costs,” said Rachel Glennerster, a University of Chicago economist who has studied development. AMC approaches to vaccines and who advised Frontier. “AMC is saying, ‘We guarantee that you will have a large market, and therefore you are worth the investment to produce at a very large scale.'”
The AMCs also encourage speed, Glennerster noted, and the climate crisis demands urgency. And, since companies don’t pay in full until the technology works well enough to capture carbon, the investment risk is less. Frontier’s model requires some upfront buying to help projects, many of which are being started by startups, get the early capital they need to grow.
Another key difference is that Frontier is a private venture, while the vaccine effort is promoted by organizations and governments. Kraus says the $925 million initial commitment is a “very strong demand signal” for decarbonizing companies that there is and will be a market for their product, and that means is to encourage more investors and governments to participate in the construction of the market.
That has happened to some extent already. In May, the U.S. Department of Energy announced $3.5 billion to set up in-person aviation pickup centers around the country. In July, UK announced an investment, similar in structure to AMC, of approximately $63 million dollars in innovative carbon-removal projects.
Minor said he thinks Frontier has had an impact in the space, in terms of its own investments and signaling to others. “Compared to what we were seeing two or three years ago, this is an acceleration of rocket ships with the amount of existing market capital flowing into space,” he said.
The amount of carbon these projects can capture at the current scale is so small that Frontier wouldn’t even be able to spend $925 million on it. But Kraus is confident that development will happen quickly. She hopes that, as the 2030 deadline approaches and more carbon is stored and thus available for purchase, the venture will attract more companies and increase its commitment.
“The more we can do to increase demand through Frontier, the better it will be for the ecosystem,” she said. “We need to attract other buyers so we can get up to speed.”