Climate

Tech companies just made a bold climate commitment

A Big Tech coalition including Microsoft, Alphabet and Salesforce has said it’ll buy everything from green steel to carbon dioxide removal in an attempt to clean up the climate.

Factories

The coalition aims to create markets for decarbonization technologies.

DAVOS, Switzerland — Davos is living up to its name as a place for movers and shakers. On Wednesday, a group known as the First Movers Coalition announced major climate commitments intended to create markets for everything from green steel and aluminum to carbon dioxide removal.

Microsoft, Alphabet and Salesforce are among the heavy hitters in tech at the forefront of the coalition that includes more than 50 companies with a total market cap of $8.5 trillion. That’s a large chunk of the U.S. stock market, and the pledge means those companies will start procuring climate-friendly products that are more expensive than their standard counterparts as well as services that don’t really exist at scale (yet). The companies’ commitments could give industries that we know we need to grow down the road the confidence that demand will be there.

The coalition launched last year at United Nations climate talks as an initiative spearheaded by Climate Envoy John Kerry and Bill Gates. The focus then was mostly on steel, shipping and aviation, all sectors of the economy that are incredibly hard and costly to decarbonize. Wednesday’s announcement threw CDR — Silicon Valley’s favorite climate solution — into the mix, along with green aluminum.

"Today is a great milestone in a very difficult long-term project," Bill Gates said.

Indeed, the trio of major tech companies collectively committed $500 million to CDR between now and 2030. Alphabet joined a handful of other tech companies in pledging $925 million to purchase CDR services last month. It didn't respond to Protocol's request about if its First Movers Coalition money was the same as its commitment to Frontier, but Bloomberg confirmed the $200 million is the same money. Microsoft has also made its own investments in removing carbon from the atmosphere while Salesforce founder Marc Benioff has invested in companies that do so.

Right now, a handful of startups are removing carbon dioxide from the atmosphere using techniques ranging from protecting forests to growing kelp to relying on machines to do the dirty work. Paying those companies to do that is currently pretty pricey, costing hundreds of dollars per ton. That adds up fast when you’re talking about a company that pumps millions of tons of carbon dioxide per year into the atmosphere when factoring in Scope 3 emissions.

Obviously Alphabet, Salesforce and Microsoft are good for it, though, and their early investments could help bring prices down by signaling there’s going to be a market for CDRl. At numerous events at the World Economic Forum this week, Kerry echoed a phrase coined by Gates called the “green premium,” which refers to the idea of paying extra for the more climate-friendly option. For companies, that can refer to paying a bit of extra cash for green steel or CDR. (Though to be clear, there’s no alternative to the latter outside cutting emissions.)

“No government has the money to be able to solve this problem by itself,” Kerry said. “No government can move fast enough to solve this problem by itself. We need you. We need the private sector around the world to step up.”

While that first point is a bit up for debate given that the federal budget for the military alone is north of $700 billion per year, it’s clear that procurement is a huge avenue for both corporations and the government to spur new markets and bring down costs of the technology we need to address the climate crisis. The Biden administration itself has pulled on some of those levers, notably with a plan to purchase only electric vehicles by 2035. With 645,000 vehicles, that would help drive costs down for batteries, charging and other parts of the EV equation.

The government is also investing billions in direct air capture R&D, which could bring down costs. But tech companies’ commitment to buying those services offer another avenue to do that. Right now, most tech can remove maybe a few thousands of tons from the atmosphere a year. To keep global warming to 1.5 degrees Celsius, a key guardrail, the world will need to pull multiple billions of tons of carbon dioxide from the sky each year in the coming decades. Exactly how much will depend on how fast we deploy renewables, EVs and other climate solutions we already have at the ready.

Kerry noted that the government partners in the First Movers Coalition are also working to create more regulatory certainty and policies that can speed the adoption of new, cleaner technologies. Tax credits and even more R&D investments are some of the avenues that could open the door to reimagining polluting industries and creating new sectors of the economy to clean up the carbon pollution already in the atmosphere.

The new commitment from the First Movers Coalition will give CDR companies a little more certainty that the market will develop for their services. That, in addition to commitments for green steel and aluminum as well as other products, is, in Kerry’s words, the “highest-leverage climate action that companies can take, because creating the early markets to scale advanced technologies materially reduces the whole world’s emissions.”

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