FinTech company Stripe, e-commerce firm Shopify, consultancy McKinsey and technology companies Alphabet and Meta have teamed up to launch Frontier, an advance market commitment (AMC) to accelerate the development of permanent carbon removal technology.
The founding companies will invest nearly $925 million over the next nine years to purchase permanent carbon removal solutions from manufacturers worldwide, they said on Tuesday.
“We want to send a loud demand signal to entrepreneurs, researchers and investors that there is a market for permanent carbon removal … [you] build and we will buy,” Nan Ransohoff, head of climate at Stripe said.
A wholly owned subsidiary of Stripe, Frontier will also be funded by the tens of thousands of businesses who purchase carbon removal technology through Stripe Climate. This will make Frontier one of the world’s largest coalitions of carbon removal purchasers by funding and membership.
The AMC model was successfully piloted a decade ago to accelerate the development of pneumococcal vaccines for low-income countries, saving an estimated 700,000 lives. This is the first time the model is being applied to carbon removal at scale, the companies said in a joint statement.
Carbon removal technology includes initiatives such as tree restoration, advanced soil management, enhanced root crops and ocean-based carbon removal.
“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,” said Kate Brandt, chief sustainability officer at Google, which is owned by Alphabet.
“That’s why we are joining this 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.”
Reducing carbon emissions is essential to avoid the worst effects of climate change, say industry experts. There is currently no pathway to keeping global temperature increases within 1.5°C without permanently removing gigatonnes of carbon dioxide already present in the atmosphere and ocean, the Intergovernmental Panel on Climate Change (IPCC) said in one of its reports.
Although carbon removal technology has made significant progress, it is still not on track to reach the required scale. As of last year, fewer than 10,000 tonnes of carbon dioxide had been permanently removed from the atmosphere through this kind of technology. IPCC models require an average of about 6 billion tonnes of annual carbon dioxide removal by 2050 to hit the 1.5°C target.
“Frontier is an important step to help accelerate the development and adoption of carbon removal technologies for a more sustainable world,” said Peter Freed, head of energy strategy at Meta.
Meta has committed to reach net zero emissions across its value chain by 2030 through emissions reduction and carbon removal.
Frontier aims to facilitate carbon removal purchases on behalf of buyers in two forms.
For early-stage carbon removal suppliers piloting new technology, buyers will enter into low-volume pre-purchase agreements.
For growth-stage suppliers scaling their technology, Frontier will facilitate agreements between individual buyers and suppliers.
“Frontier sends a strong commercial signal of sustainable demand for permanent carbon removal. It will be a crucial piece in derisking the industry and in catalysing carbon removal towards a new era of growth,” said Karan Khimji, co-founder and chief commercial officer of Dubai-based carbon removal company 44.01.
Frontier will also identify technology with long-term potential and help them scale through purchases and mentoring.
“Climate change can only be solved if we come together and that’s what we are doing with this advance market commitment,” said Stacy Kauk, head of sustainability at Shopify.