Big tech firms have partnered up to spend nearly $1 billion on an initiative called Frontier to spur demand for permanent carbon capture technology development in the next nine years.
The founding companies include Stripe, Google parent Alphabet, Facebook parent Meta, Shopify, and consulting firm McKinsey. They plan to stimulate future demand by committing to buy $925 million worth of carbon removal from firms involved in creating such technologies.
By facilitating such purchases, Frontier’s goal is to “send a strong demand signal to researchers, entrepreneurs, and investors that there is a growing market for these technologies,” notes Frontier’s website.
Frontier is an advance market commitment (AMC) that will create demand before it even exists as it acquires carbon dioxide on behalf of buyers. Stripe, an e-commerce payments platform, wholly owns the Frontier fund. Online sellers that participate in its Stripe Climate program will also be able to donate a portion of their online sales to the fund.
“As of 2021, less than 10,000 tonnes of carbon dioxide had been permanently removed from the atmosphere—one million times short of the annual scale needed,” said Shopify’s head of sustainability, Stacy Kauk.
“This AMC is designed to give the industry, including researchers, entrepreneurs, project developers, and investors, confidence to begin building today – and to do so with urgency.”
Frontier will be managed by a team of experts who will perform due diligence and assist buyers with making carbon removal purchases. Frontier will aggregate demand for each year between 2022 and 2030 into a total annual demand pool. Suppliers will then use the RFP process to be considered for funding.
Early-stage developers of new technologies will be able to enter into low-volume, prepurchase agreements with potential buyers. Larger suppliers ready to scale will benefit from Frontier’s facilitated offtake agreements guaranteeing future purchasing of carbon removal at an agreed price if and when delivered. When carbon dioxide is removed, suppliers will get paid, and the removed tonnes will be issued back to buyers.
“Existing carbon removal solutions such as reforestation and soil carbon sequestration are important, but they alone are unlikely to scale to the size of the problem,” notes Stripe on its website. “New carbon removal technologies need to be developed—ones that have the potential to be high volume and low cost by 2050—even if they aren’t yet mature.”
Stripe points out that carbon removal solutions face a chicken-and-egg problem as early technologies, which are more expensive, don’t attract a critical mass of customers. However, without a larger demand, the companies can’t scale to make production cheaper.
And that’s where Frontier comes in. By aggregating funds from committed buyers and using those to subsidize new and existing carbon removal technologies, the fund hopes to accelerate the transition to a low-carbon future.
To be sure, many companies individually already have been sponsoring investments into new carbon removal technologies. Stripe Carbon directs a fraction of online seller revenue to that purpose, with thousands of companies participating. Its 2021 portfolio of carbon removal projects included 44.01, Ebb Carbon, Eion, Sustaera, Seachange, Running Tide, Heirloom, Mission Zero, and many others.
Shopify has contributed to carbon removal since 2019 by partnering with 22 entrepreneurial firms and committing more than $32 million. Its climate-forward partners include Carbon Engineering, Charm Industrial, Heirloom Carbon, Planetary Hydrogen, and Running Tide.
“We are thrilled about the possibilities that Frontier will bring to the carbon removal market,” said Shopify’s Kauk. “Our mission here is to remove friction and enable other companies to easily buy carbon removal, to set high-quality standards, and take a leading role in scaling carbon removal companies selected by Frontier.”