A clutch of the world's largest tech firms have teamed up to launch a pioneering multi-billion dollar fund aimed at bringing carbon removal start-ups to scale and reducing the costs of drawing CO2 from the atmosphere using technology.
The Frontier Fund, launched today by financial services company Stripe, Google owner Alphabet, Shopify, McKinsey, and Facebook owner Meta, is aiming to invest $925m over the coming nine years in companies focused on building technological solutions designed to suck carbon from the atmosphere.
The fund's advance market commitment (AMC) mechanism, used in the past to spur the development of vaccines with high up-front development costs, will enable companies to enter into offtake agreements with carbon removal suppliers for future tonnes of high-quality carbon removals, according to the group.
Kate Brandt, chief sustainability officer at Google, said that sending demand signals to the nascent carbon removals market would be critical to bringing down the costs of removal carbon from the air.
"At Alphabet, we know first-hand from our long-standing history of working to advance new climate solutions that signalling early demand can spur innovation and lower the price for everyone," she said. "That's why we are joining this exciting coalition of climate leaders, who jointly see the promise of new carbon removal technologies and the power of sending a clear demand signal to the market."
Under the plans, fledgling carbon removal firms will be invited to pitch for funding to Frontier, which will then evaluate their negative emissions offering, taking a range of factors into consideration. The fund's experts will then negotiate a price per tonne captured with successful companies, and make a commitment to spend millions of dollars for the delivery of those tonnes as offsets, according to the group.
The carbon removals market remains nascent, with direct air capture (DAC) technologies that filter carbon from the atmosphere systems currently limited to a handful of pilot projects around the world that are expensive to operate, such as Swiss firm Climeworks' facility in Iceland.
Other carbon removals techniques include nature-based solutions, such as reforestation, ecosystem restoration, and biochar, as well carbon capture and storage (CCS) technologies that can be installed at industrial, gas, and bioenergy plants.
Frontier said it was likely to pay higher initial prices per tonne to technologies that meet particular criteria around cost, physical footprint, capacity, permanence and commitment to environmental justice.
Last week, the world's leading climate scientists making up the UN's Intergovernmental Panel on Climate Change (IPCC) concluded that scaling carbon removal technologies was now "unavoidable" in order to cap global temperature rise at safe levels, with the technologies required to compensate for emissions produced in sectors most resistant to decarbonisation, such as aviation, shipping and chemicals. Advocates of CDR technologies have long argued that policy frameworks need to be introduced now in order to scale the market in time to mitigate for any overshoot in global carbon budgets over the coming decades.
However, carbon removal technologies remain contentious within some environmental circles, amid concern that national and corporate decarbonisation approaches that rely on unproven, costly and unregulated negative emissions technologies risk hindering efforts to reduce absolute emissions in the first place, by giving polluters license to continue burning fossil fuels. There are also fears that - if poorly regulated and policed - nature-based solutions efforts such as tree-planting can have a detrimental impact on biodiversity, food and water security, as well as local or Indigenous livelihoods.
But Dickon Pinner, senior partner and co-leader of McKinsey Sustainability, said that carbon removal technology had "an essential role to play" in the drive to reaching net zero missions.
"Our research shows that the amount of carbon removal needed by 2025 to achieve the IPCC's 1.5C pathway will be missed by 80 per cent, based on the current pipeline of projects," he said. "Frontier will play a catalytic role in enabling the supply of high-quality carbon removal."
The fund, a public-benefit corporation wholly-owned by Stripe, is also set to be funded by the thousands of businesses that use the Stripe Climate platform, a tool which allows businesses to direct a fraction of their revenue in carbon removal.
"With Frontier, we want to send a loud demand signal to entrepreneurs, researchers, and investors that there is a market for permanent carbon removal: build and we will buy," said head of climate at Stripe, Nan Ransohoff.
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Tech giants launch $925m fund to shrink costs of carbon removal technologies - http://www.businessgreen.com
