A collection of heavy-hitter tech companies is dipping a toe — well, actually, more like taking a major plunge — into carbon removal, giving a major signal to researchers, entrepreneurs and other investors in the space that the market has legs.
In a project known as Frontier, Alphabet, McKinsey, Meta, Shopify and Stripe have put forward a $925 million advance market commitment to speed the development of technologies to pull carbon dioxide from the air. The funds will be spent between now and 2030 “to purchase permanent carbon removal from suppliers building promising new solutions,” the group of companies said in a press release.
Carbon dioxide removal is increasingly likely to be a necessity when it comes to averting climate catastrophe. A certain amount of global warming is already locked in by the greenhouse gases that have already been put in the atmosphere, and keeping the temperature increase to within 1.5 degrees Celsius of pre-industrial temperatures will likely require removing billions of tons of carbon dioxide. But the technology to do so is not ready yet, as the Intergovernmental Panel on Climate Change’s recent report made clear. (The report was also clear we need to be building out renewables right now.)
Enter the advance market commitment, or AMC. It essentially functions as a guarantee of demand to those working on or investing in the technology. The model was originally used to develop vaccines for low-income countries, but it has never been used for carbon removal at scale. But with governments failing to really incentivize carbon removal at this stage of the game or penalize carbon emissions, Frontier could be an important nudge to keep innovation churning while waiting for a larger market to develop to pull carbon from the air.
“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 Stripe’s head of Climate Nan Ransohoff.
Frontier will work in two ways. For early-stage suppliers piloting new technologies, it will provide funds by entering into low-volume pre-purchase agreements. And for those ready to scale their technologies, Frontier will facilitate advance purchases between individual buyers and suppliers. Buyers will promise to purchase future tons of carbon removal if and when the suppliers can make it happen, which enables those suppliers to secure financing.
The factors that Frontier will consider as it identifies the technologies worth the investment are fivefold: permanence, physical footprint, cost (and scalability), capacity and environmental justice. Frontier will operate as a subsidiary of the financial services company Stripe, and will also be funded by the businesses purchasing carbon removal via Stripe Climate.
Climate TRACE's data show emissions at the facility-level.Image: Climate TRACE