Smoke billows from smokestacks and a coal fired generator at a steel factory in Hebei, China.
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Tech philanthropists are swooping in to support carbon removal

Protocol Climate

Happy Tuesday, Protocol Climate pals. We’re here today to share a few exclusives. First, we’re talking with a new nonprofit that channels philanthropy to carbon removal. Then, we’re diving into a report on the Inflation Reduction Act’s secret superpower. We also have Olivia Wilde’s salad dressing recipe. Or do we? You’ll have to read on to find out.

Carbon removal’s new funding model

Tech companies have gone all in on carbon dioxide removal. Now philanthropists are following suit. The nonprofit Terraset exited stealth mode on Tuesday and shared its mission exclusively with Protocol.

There’s a gap in how carbon removal gets funded. Tech leaders have committed to spending more than $1 billion on the industry’s services, while venture capitalists have done deals galore. Until now, though, individuals who want to pool their resources to pay for carbon removal and help the industry gain a toehold have had very few options outside purchasing services from direct air capture company Climeworks.

  • “There’s this gulf between how much people want to act and the options available to them,” Alex Roetter, who’s currently a managing director and general partner at Moxxie Ventures and previously was president at Kittyhawk and head of engineering at Twitter, told Protocol.
  • When it comes to CDR, “there can’t be large supply without a really strong signal that there’s demand.”
  • Enter Terraset, Roetter’s new venture, which is attempting to bridge that gulf by funneling private philanthropy to the most promising carbon removal startups that need capital to scale.

Terraset already has some big donors — but it’s also accessible to anyone with an interest in giving money to sucking carbon from the sky.

  • The nonprofit, which has been operating in stealth mode since early this year, has secured annual donations in the “low six figures,” according to Roetter, from a handful of donors.
  • Among them are investor Tim Ferriss and Segment co-founder Calvin French-Owen.
  • Starting today, anyone can donate any amount to Terraset. The organization pools the funds, then vets and selects the CDR projects using a handful of requirements.

The nonprofit has already funded two startups. Initial donations have been used to back Charm and Heirloom, two of the proliferating number of CDR providers.

  • “We need a lot of diversified buyers from various different parts of the economy,” including corporations, governments, high net worth individuals, and people giving small amounts, Shashank Samala, the CEO and co-founder of Heirloom, said, since every additional buyer helps companies like Heirloom scale up and reduce costs as a result.
  • For its part, Terraset does due diligence and selects CDR projects it backs based on them meeting a handful of requirements, including scientific rigor and a commitment to ethical carbon removal.
  • Though the group doesn’t have scientists on staff, it uses guidance of groups like advance market commitment organization Frontier and nonprofit CarbonPlan to help evaluate CDR startups.

Read the full story here.

— Michelle Ma

Trucking’s overlooked IRA tax credits

Tired: the Inflation Reduction Act’s electric passenger vehicle tax credits.

Wired: the IRA’s EV tax credits for medium- and heavy-duty vehicles.

A lot of digital ink has been spilled about nearly all aspects of the $7,500 EV tax credit. But the law may have an even bigger impact on electrifying medium- and heavy-duty trucking. A new report shared exclusively with Protocol reveals just how big an impact the under-the-radar tax credits could have on cleaning up one of the dirtiest segments of the transportation sector.

The IRA has some unprecedented tax credits for delivery vans, long-haul trucks, buses, and more. Among them are a $7,500 credit for light- and medium-duty vehicles and $40,000 for heavy-duty trucks. Those credits don’t come with any requirements for where battery components and minerals can be sourced from or how much vehicles cost, both of which are facets of the passenger EV tax credits.

  • “The fact that the IRA includes a new commercial EV tax credit is, to my mind, a game changer,” Sara Baldwin, the director of electrification at policy shop Energy Innovation, said.
  • The group is responsible for the new report that shows that the law’s tax credits could rapidly increase the share of electrified trucks and vans used in fleets by 2030 compared to business as usual.
  • Without any additional policies, 17% of new sales would be battery EVs by 2030. With the IRA, though, that percentage could rise to as high as 38%.
  • Heavy-duty electric truck sales could nearly triple due to the IRA, reaching 27% by 2030.
  • “The medium- and heavy-duty vehicle market is much more nascent,” when it comes to electric options, Baldwin said. “There’s a lot more opportunity for growth, as well as innovation.”

It’s not just tax credits for fleet EVs that could speed their adoption. The IRA essentially turned to the EV industry and Oprah’d it with tax credits. Beyond the vehicles, charging also got a huge boost with tax credits of up to $100,000 per charger.

  • Meanwhile, the bipartisan infrastructure law set aside $7.5 billion for states to build the charging networks of their dreams.
  • Baldwin said the various tax credits plus the charger funding could send “the up-front cost barrier and then the charging and range anxiety barrier” tumbling down for fleet owners.
  • Some major businesses have already made major pledges to electrify their fleets. Amazon, for example, put in an order for 100,000 electric vans from Rivian and installed some of its own charging stations.
  • The new tax credits could provide incentives for it and other major companies to make more EV purchases, including heavy-duty trucks, as well as make it easier for smaller companies to transition to electric fleets.

Regulations could further tip the scales. Carrots won’t get us to full electrification, tasty as they may be. Sticks will also play a role in convincing fleet owners that electric options are the best ones.

Read the full story here.

— Brian Kahn

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1,200 kilowatt-hours

Carbon removal will likely play some role in reaching net zero. But doing so will require huge amounts of energy. It takes around 1,200 kilowatt-hours to remove a ton of carbon from the sky using direct air capture. That could be a barrier to widespread use, according to MIT Energy Initiative’s senior research engineer Howard Herzog.

The carbon removal industry expects to scale to capture billions of tons per year. That could put it in direct competition with renewable needs for other purposes like, say, keeping the lights on. (For reference, the average American home uses a little less than 900 kilowatt-hours of energy per month.) Capturing “just” 1 billion tons would essentially require all of the carbon-free energy that’s available today, including nuclear.

The high energy use also hides carbon removal’s true cost, according to Herzog, who did the energy use analysis and is skeptical the industry can reach its target price point of $100 per ton.

  • Even the lowest-carbon fossil fuel, natural gas, generates almost half a ton of carbon dioxide for every ton that is taken out of the atmosphere via DAC, according to his estimates.
  • In that scenario, if a DAC company says it can perform the capture for $100 per ton, that’s really the gross capture cost. The net cost is actually double that amount.
  • What that means is that, for DAC to be economically feasible, the energy powering it has to be carbon-free. (Which also makes sense, because if you’re trying to pull carbon dioxide out of the air, it kind of defeats the purpose if you’re adding carbon dioxide to the atmosphere in the process.)

DAC’s high energy use points to the value of decarbonizing everything as fast as possible. One ton of carbon that doesn’t make it into the atmosphere today is one less to remove tomorrow. And that means less conflict over future renewable energy.

– Michelle Ma

Hot links

Climate tech is a bright spot in the bleak venture capital landscape. Startups in climate and energy represented five of the top 10 equity deals in the third quarter.

The Nikola saga ended in a guilty verdict. Trevor Milton, the founder of the EV company Nikola, was convicted of multiple counts of fraud after lying to investors about the company’s technology.

E-waste is an underutilized source of critical minerals. Only an average of 17% of e-waste is recycled, which means vast amounts of resources needed by the energy transition are being, well, wasted.

Carbon capture is a secret water hog. Using it at scale could double the entire world’s water use.

California’s Prop 30 has become a tech battleground. The ballot measure would tax the state’s richest residents to subsidize the EV transition. Lyft supports it, while an array of tech leaders, including Netflix’s Reed Hastings and OpenAI’s Sam Altman (plus Gov. Gavin Newsom), oppose it.

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Thanks for reading! As ever, you can send any and all feedback as well as salad dressing recipes to See you Thursday!

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