Why Big Tech Is Pouring Money Into Carbon Removal

The

carbon

removal

market is expanding rapidly and hundreds of millions are

pouring

into it. Companies are removing

carbon

dioxide from the atmosphere and there is now increased attention on how and where that CO2 will be stored. The carbon dioxide

removal

market has basically seen exponential development over the past two and a half years. Major

tech

companies like Stripe, Alphabet, Meta, and Shopify have committed nearly $1 billion in seed funding to carbon removal startups that remove legacy carbon emissions from the atmosphere and store that CO2 permanently. That's different from capturing emissions from a smokestack or recycling carbon to make temporary products like carbonated drinks, plastics or fuels.

Experts say we need to remove 10 billion tonnes of CO2 from the atmosphere each year by 2050. And to achieve this, we will need to do more than plant trees. No matter how quickly the world decarbonizes, carbon removal remains a necessity. We have to reduce emissions on a large scale and at an enormous pace. Final point. Unfortunately, because we've done such a poor job with that to date, we're now going to have to decarbonize as well. There are a large number of companies researching and implementing novel methods of permanent carbon storage, and approaches vary widely. CO2 is injected into these rocks and then mineralized.

The CO2 is injected into the concrete. We convert it into bicarbonate or sodium bicarbonate, and then it stays in seawater for 100,000 years. We convert plant waste into this liquid bio-oil and then inject it deep into the ground. We will probably need many of these different approaches to avoid the worst effects of climate change. There is no way there is one path, one

tech

nology, one way to do this. It will be a huge portfolio of technologies to extract carbon from the air and store it permanently. Direct air capture companies like Climeworks and Carbon Engineering, both founded in 2009, are some of the best-known players in this space.

They use giant fans along with complex chemical processes or filters to remove CO2 from the air. But until recently, there was no incentive to simply bury that carbon, so they had to sell it in various markets. Carbon engineering, for example, has sold captured CO2 to oil and gas companies that use it for enhanced oil recovery, in which CO2 is injected underground to extract more oil from oil wells. Carbon is sequestered, but since the process produces more oil to burn, it almost never generates negative emissions and is therefore not carbon removal. Enhanced oil recovery is the largest market for sequestered carbon, and there is nothing that comes close to it in terms of scale.

Climeworks says it will not partner with oil and gas companies, and initially went to market selling captured CO2 to greenhouses in Switzerland, where it is used to grow vegetables, and to beverage companies to make carbonated drinks. But in 2017, Climeworks began working with Carbfix, an Icelandic company that permanently sequesters CO2 by turning it into stone underground. This is just one of many technical ways to store carbon. And after the landmark 2018 Intergovernmental Panel on Climate Change report pointed out the need for carbon removal to limit global warming to 1.5 degrees Celsius, several novel methods emerged. Charm Industrial, for example, converts carbon-containing biomass, such as branches, leaves or corn stalks, into an oil that can be injected deep underground.

What really convinced us that it would become a big market is the fact that by 2050 we will need to remove 10 billion tonnes a year and it should be a trillion dollar a year market. You know, that came out in the 2018 IPCC report. As increasingly dire IPCC reports emphasized carbon removal even more, new companies started popping up left and right and private funding grew rapidly. Stripe, which makes payment processing software, led the way by spending $1 million on carbon removal purchases from four companies in 2020 and has since increased its commitment to $15 million, adding ten startups to its portfolio. .

And this year, Stripe partnered with Alphabet, Neta, Shopify and McKinsey to launch an initiative called Frontier, which plans to purchase $925 million in carbon removal by 2030 from a host of startups in an effort to accelerate efforts to R&D and bring reduced costs in what is known as an early market commitment. And the idea behind this, advancing market engagement, is essentially sending a strong demand signal to buyers, suppliers, entrepreneurs, investors and researchers that there will be a market for their technologies. Eric Toone is the technology lead at Breakthrough Energy Ventures, which has made numerous investments in the carbon removal space.

It must be remembered that the scales these will have to be constructed almost defy understanding. We are talking about building an industry that is three or five times larger than the current global petrochemical industry. The simplest way to capture and store carbon is to simply plant more trees. But Jan Wurzbacher, co-CEO of Climeworks, said this will not be enough. We should do everything we can about it, but the area we have available simply won't be enough. If we wanted to remove 10 billion tons of CO2 from the atmosphere, we would need the area of ​​all of Europe.

Therefore, on the other hand, technology-based solutions, specifically direct air capture, are much more scalable. Through its partnership with Carbfix, Swiss company Climeworks launched a new direct air capture and storage scheme in Iceland this year and recently raised $650 million to further scale its technology, the largest funding round it has ever seen. the carbon removal industry. Partially funded by Stripe, the company's newest plan has the capacity to remove 4,000 tons of CO2 per year by dissolving captured carbon and water and injecting it into basalt rock formations. CO2 is injected into these rocks and then mineralized. This literally means that CO2 two years after injection turns to stone.

Thus it is solidified one kilometer underground and stored absolutely permanently for the next hundreds of millions of years. Right now, if an individual wanted to buy carbon removal from Climeworks, it would cost them more than $1,000 per ton, a price Wurzbacher believes will fall to about $200 by the mid-2030s as the company grows. But the real storage part of the equation will be a mere fraction, since underground injection is a relatively simple process. So it will be less than 10% of the total cost. Peter Reinhardt, CEO of Bay Area-based Charm Industrial, believes his company's technology will become even cheaper because Charm's strategy relies on sourcing crop residues such as stems, stems and leaves from farms, that have already captured carbon from the atmosphere.

It is substantially cheaper than direct air capture because the plants are already doing the capture for us. So we really just need to do the conversion to put the carbon in the ground. Converting biomass to bio-oil with a pyrolyzer is the expensive part and the reason the entire process costs about $600 per ton right now. The process of converting biomass to bio-oil is called pyrolysis or fast pyrolysis, and it's where we first grind the biomass into very, very small pieces so that we can push heat through it very quickly, and then we heat it up from room temperature. to 500 degrees Celsius in less than a few seconds.

And that really fast heating rate vaporizes the cellulose and biomass, and then we condense it back into a liquid. Finally, the bio-oil is injected thousands of feet underground, beneath all water resources, where it solidifies. Reinhardt says that, geologically speaking, bio-oil sequestration can occur in a wider variety of locations than liquid CO2 storage, and that as the company grows, he expects costs to drop to around $50 per ton. Stripe was Charm's first customer and now others like Microsoft and Shopify have also joined. To date, we have sequestered just over 5,400 tonnes of CO2 equivalent, and as far as we know, that represents about 90% of permanent carbon removals. delivered last year.

While Climeworks and Charm aim to lock CO2 underground, Canadian company CarbonCure is harnessing that carbon by injecting it into concrete mixes. This permanently stores CO2 and has the added benefit of strengthening the concrete, a process we saw at the Central Concrete plant in San Jose, California. The CO2 is injected into the concrete and reacts with the cement as it is dosed. And a chemical reaction occurs where calcium reacts with CO2 to form a mineral again. Calcium carbonate, also known as limestone, but very, very fine. The reason that reaction is important is that it is actually increasing the strength of the concrete.

Concrete producers like Central can then optimize their mixes, so they need to use less cement while still maintaining a very high quality concrete that can be used for any application. The ability to use less cement is key, since cement production itself produces many emissions. Less cement, along with market-based incentives for carbon reduction, also help make CarbonCure mixes cost-competitive with traditional concrete. Right now, CarbonCure's producing partners get their CO2 from large industrial facilities like ethanol plants or refineries, where it is captured from smokestacks. That means CarbonCure is not involved in removing CO2 from the atmosphere, but simply prevents new emissions, which it is successfully doing at nearly 600 plants around the world.

Stripe was the first company to buy carbon removal from CarbonCure, and others like Shopify, Mapbox, and Zendesk have since followed suit, helping Carbon Cure subsidize its costs. Currently under construction, Amazon's new headquarters in Arlington, Virginia, uses CarbonCure technology. However, the company is interested in large-scale carbon removal and is involved in a Department of Energy-funded partnership with a California-based direct air capture company to convert captured CO2 into concrete products in Indiana. Our impact to date is 166,000 metric tons of CO2, but the potential of this technology is 500 million metric tons per year, and we believe we will be able to do that by the end of the decade.

Another emerging method of permanent carbon removal relies on ocean capture and storage. The oceans store about 88% of our carbon in their chemistry. Without them, climate change would be much worse than it is now. Canada-based Planetary Hydrogen was founded in 2019 and its technology is based on the fact that the relative concentration of CO2 in the atmosphere and ocean always remains the same and has therefore increased over time. Since CO2 is an acid, the ocean has become more acidic. But if we can decrease the acidity of the ocean by reducing the CO2 content, the ocean would have more capacity to absorb additional CO2 from the air.

That's what Planetary is trying to do by adding an antacid to seawater. So we take an antacid or an alkaline substance, a base that is derived from rocks, and we purify it so that it's actually a very mild base and we add it to seawater. So by simply adding our antacid to seawater or neutralizing this acidic CO2, we convert it into baking soda or baking soda. And then it remains in seawater for 100,000 years. And what that means is that because the concentration of CO2 in the ocean is lower now, more CO2 will invade from the atmosphere to basically balance that concentration.

Planetary plans to begin open-ocean testing this year by adding its antacid to wastewater treatment facilities, which already have permits allowing them to clean the water before it reaches the ocean. Shopify is Planetary's first customer, and at this early stage, Kelland estimates costs are around $800 per ton of CO2 removed, but could fall to about $75 per ton as the company grows. Overall, the various ways Climeworks, Charm, CarbonCure and Planetary capture and store CO2 represent only a small fraction of carbon removal technology and development. Other methods of direct air capture, as well as geological, biological and oceanic carbon storage, are being developed and are also benefiting from the funding boom.

It's an exciting time to be working in this space, but initial purchases byTech companies and others will only go so far. A billion dollars doesn't make a market, right? This is a step in the right direction, but it certainly won't get us there. If we get closer to the year 2050, we're going to need, say, 5 billion tons per year of carbon removal at $100 a ton. That equates to $500 billion each year in customer demand for carbon removal. And that's a conservative estimate of how much we'll need to remove. But there's no doubt that if we're going to do this to try to address climate change, eventually we'll just have to capture the CO2 and pump it into the ground and store it for eternity.

And to do that, we need carbon markets. About 40 countries and more than 20 cities, states and provinces already have some type of carbon price. Launched in 2005, Europe's carbon market is one of the oldest and best established in the world, and as of 2019, all jurisdictions in Canada have also set a price on carbon. Even China introduced a carbon pricing plan in 2021, turning the world's largest emitter into the world's largest carbon market. I think other international markets are going to play a really key role in the growth of carbon removal companies, but they probably play a role further down the cost curve and further down the implementation curve.

Many industry leaders hope the United States will also implement a federal carbon pricing plan and increase the current tax credit for carbon storage, which is about $35 per ton of geologically sequestered CO2, to about $22 per the CO2 that is used in a product like concrete. Currently, there are no incentives for ocean storage methods because verifying the amount of CO2 captured with this technology is very difficult to do. The way you measure the sinking of a ton of seaweed is very different from the way you measure a ton of bio-oil injection. This is kind of a challenge that we're going to have to solve for carbon removal, and we need to solve it so that this doesn't go the same way as offsets.

Failed offset efforts, such as forest conservation projects that ended up providing few real benefits, have made the carbon removal industry acutely aware of the need to validate every ton of CO2 removed. And while some of these technologies may seem far removed from that, Toone is optimistic. There is a market that is growing and costs that are decreasing. And then the question is, where do they intersect? It certainly happens in this decade. Carbon removal generally enjoys bipartisan support in Washington. And the Department of Energy recently launched a $3.5 billion program to develop four direct air capture centers across the United States, each aiming to permanently remove more than 1 million tons of CO2.

I think government management of a market occurs when people decide that it is cheaper to deal with CO2 than to deal with its consequences. And there is a growing awareness about exactly what the costs of that carbon are.