Stripe starts paying firms to remove CO₂ from the air
And Of Key Stripe, Founder Fund Of The Collison John Backers Patrick Frontier
The nascent $925m (€883m) carbon-removal effort funded by major technology firms has started writing checks to fledgling companies aiming to remove CO₂ from the air.
The Frontier fund said it has selected six startups to receive grants or pre-purchase agreements — essentially, advance payments for carbon removal in the future — from the fund. It’s the first set of commitments from the fund, which has raised money from Stripe, Meta, Alphabet, Shopify and McKinsey & Co. The fund debuted earlier this year and grew out of similar carbon-removal purchase programs at Stripe and Shopify.
Many climate efforts are focused on reducing emissions, but in order to combat climate change, carbon also must be removed from the air. The technology to do so is still in its infancy, and the processes are prohibitively expensive.
The goal of Frontier is to create a market for carbon-removal technology at scale. The bulk of the $925m is intended to pay for the carbon removal after it’s completed — so-called offtake agreements. To start, however, the fund is paying smaller companies before they’ve even begun. So far, only Stripe is paying for those pre-purchase agreements, while the other participants in the fund can choose whether they want to do so or wait for the companies to mature.
For this first round, a group of 19 experts looked at a pool of 26 applicants and selected six companies, which hail from the US, the UK, Australia and Israel, and which focus on direct-air capture, enhanced rock weathering and synthetic biology. Stripe will be the first customer for each of them. The payments processor has committed to spend $2.4m (€2.29m) buying carbon removal from those six companies and has set aside another $5.4m (€5.15m) for future purchases from the same set.
The fund’s overseers said they were heartened by the diversity and creativity among the applicants, but they also recognized just how minuscule the current capacity for carbon removal is compared with the eventual scale needed to meet climate goals. Experts predict that by 2050, 6 billion tons of carbon must be removed from the atmosphere each year; so far, only about 10,000 tons have been removed in all. The pre-purchase agreements are buying hundreds of tons each.
“On the one hand, there’s been a huge amount of momentum, and at the same time, there's not enough momentum,” said Nan Ransohoff, head of climate at Stripe. “There’s a very big gap between those two numbers.”
The fund will select another round of companies to buy from in the autumn. The hope is to send a clear message to anyone considering founding a startup to attack this problem: If you build something promising, you’ll have buyers.
“I think it's unrealistic for everybody to start to see huge volume in the next few years,” Ransohoff said. “We have to be both patient and impatient at the same time."
Bloomberg
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