The market for carbon removal is expanding rapidly and hundreds of millions are pouring in.
Companies are pulling carbon dioxide out of the atmosphere, and now there's increased attention on how and where that
CO2 is going to be stored.
The market for carbon dioxide removal has basically had an exponential development over the
past two and a half years.
Major technology companies like Stripe, Alphabet, Meta and Shopify have committed nearly a billion dollars in early
stage funding to carbon removal startups that take legacy carbon emissions out of the atmosphere and store that CO2
permanently. That's different than capturing emissions from a smokestack or recycling carbon to make temporary products
like carbonated beverages, plastics or fuels.
Experts say that we need to remove 10 billion tons of CO2 from the atmosphere every year by 2050.
And to get there, we'll need to do more than plant trees.
No matter how rapidly the world decarbonizes, carbon removal remains a necessity.
We have to do emissions reduction at a massive scale, at a massive pace period.
Full stop. Unfortunately, because we've done such a poor job with that to date, we are now also going to have to do
carbon removal.
There's a whole host of companies researching and implementing novel methods of permanent carbon storage, and
the approaches vary widely.
The CO2 was injected into these rocks and is then mineralized.
The CO2 is injected into concrete.
We're turning it into bicarbonate or baking soda, and then that stays in seawater for
100,000 years.
We convert waste plant residue into this liquid bio oil, and then we inject it deep
underground.
We'll likely need many of these different approaches to avert the worst effects of climate change.
There's no way that there's going to be one pathway, one technology, one way of doing this.
This is going to be a huge portfolio of technologies to take carbon out of 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 take CO2 out of the air.
But until recently, there's been no incentive to simply bury that carbon, so they've had to sell it into various
markets. Carbon engineering, for example, has sold its captured CO2 to oil and gas companies that use it for
enhanced oil recovery, in which CO2 is injected underground in order to extract more oil from petroleum
wells. The carbon is sequestered, but since the process produces more oil to be burned, it almost never leads
to negative emissions and is therefore not carbon removal.
Enhanced oil recovery is the largest market for sequestered carbon, and there's nothing else that comes close to that in
terms of scale.
Climeworks says that it will not partner with oil and gas companies, and initially went to market by selling captured
CO2 to greenhouses in Switzerland, where it's used to grow vegetables, and to beverage companies to make carbonated
drinks. But in 2017, Climeworks began working with Carbfix, an Icelandic company that sequesters CO2
permanently by turning it into stone underground.
That's only one of many technical ways to store carbon.
And after the landmark 2018 Intergovernmental Panel on Climate Change report noted the necessity of carbon removal
in limiting global warming to 1.5 degrees Celsius, a number of novel methods emerged.
Charm Industrial, for example, converts carbon-containing biomass like branches, leaves or cornstalks to an
oil which can be injected deep underground.
What really made us convinced that it would become a big market is the fact that by 2050
we need to be removing 10 billion tons a year and it needs to be a trillion dollar a year market.
You know, that came out in the 2018 IPCC report.
As increasingly dire IPCC reports further emphasized carbon removal, startups began popping up left and
right, and private funding has grown quickly.
Stripe, which makes payments 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 new companies to its
portfolio. And this year, Stripe teamed up with Alphabet, Neta, Shopify and McKinsey to launch an initiative called
Frontier, which plans to purchase $925 million worth of carbon removal by 2030
from a whole host of nascent companies in an effort to accelerate R&D efforts and bring costs down in what's known
as an advance market commitment.
And the idea behind it, advance market commitment, is essentially to send a strong demand signal
to buyers, suppliers, entrepreneurs, investors, researchers that there is going to
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.
You have to remember that the scales these are going to have to be built out at almost defy
comprehension. You're talking about building an industry that's three times, five times larger than the global
petrochemical industry today.
The easiest way of capturing and storing carbon is simply planting more trees.
But Jan Wurzbacher, Co-CEO of Climeworks, said that this just won't be enough.
We should do as much as we can of that, but the area that we have available will
just not be sufficient. Like if we wanted to remove 10 billion tons of CO2 from the atmosphere, we'd need the area
of whole Europe.
Therefore, on the other hand, technology-based solutions, namely direct air capture, they are much more scalable.
Through its partnership with Carbfix, Swiss company Climeworks launched a new direct air capture and storage
plan in Iceland this year and recently raised $650 million to scale up its tech further, the biggest funding round that
the carbon removal industry has ever seen.
Partially funded by Stripe, the company's newest plan has the capacity to remove 4000 tons of CO2 per year by
dissolving captured carbon and water and injecting that into basalt rock formations.
The CO2 is injected into these rocks and is then mineralized.
That literally means the CO2 within two years after injection is turned into stone.
So it is solidified a kilometer underground and thereby it is absolutely permanently stored
for the next hundreds of millions of years.
Right now, if an individual wanted to purchase carbon removal from Climeworks, it would cost over $1,000 per ton,
a price Wurzbacher believes will drop to about $200 by the mid 2030's as the company scales up.
But the actual storage part of the equation will be a mere fraction of that, since underground injection is a
relatively simple process.
So it'll be less than 10% of the overall cost.
Peter Reinhardt, CEO of Bay Area-based Charm Industrial, thinks his company's tech will be even cheaper because
charm strategy relies on sourcing crop residue like stalks, stems and leaves from farms, which has already captured
carbon from the atmosphere.
It is substantially cheaper than direct air capture because the plants are already doing the capture for us.
And so we really just need to do the conversion into putting the carbon underground.
Converting biomass to bio oil with a pyrolyzer is the expensive part and why the entire process costs about
$600 per ton right now.
The conversion process from biomass to bio oil is called pyrolysis or fast pyrolysis, and
it's where we first grind down the biomass into really, really tiny pieces so that we can push heat through it
really quickly, and then we heat it up from room temperature to 500 degrees centigrade in less than
a few seconds. And that really fast heating rate vaporizes the cellulose and the
biomass, and then we condense it back into a liquid.
Finally, the bio oil is injected thousands of feet underground, below all water resources, where it
solidifies. Reinhardt says that, geologically speaking, bio oil sequestration can happen in a wider variety of
places than liquid CO2 storage, and that as the company scales, he expects costs to drop to about $50 a ton.
Stripe was Charm's first customer and now others like Microsoft and Shopify have also bought in.
To date, we've sequestered a little more than 5400 tons of CO2 equivalent, and as far as we
know, that was about 90% of permanent carbon removals delivered last year.
While Climeworks and Charm aim to lock CO2 underground, Canadian company CarbonCure is putting that carbon to use by
injecting it into concrete mixes.
This permanently stores the CO2 and has the added benefit of making the concrete stronger, a process we got to see at
the Central Concrete plant in San Jose, California.
The CO2 is injected into concrete and it's reacting with the cement as it's being
batched. And a chemical reaction occurs where the calcium reacts with the
CO2 to form a mineral again.
Calcium carbonate, also known as limestone, but very, very fine.
Why that reaction matters is it's actually increasing the strength of concrete.
Concrete producers like Central are then able to optimize their mixes, so they need to use less cement while
still maintaining very high quality concrete that can be used for any application.
The ability to use less cement is key, since cement production itself produces a lot of 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 producer partners source their CO2 from large industrial facilities like ethanol plants or
refineries, where it's captured from smokestacks.
That means that CarbonCure isn't involved in removing CO2 from the atmosphere, just preventing new emissions, which
it's doing successfully in nearly 600 plants worldwide.
Stripe was the first company to purchase carbon removal from CarbonCure, and since then, others like Shopify, Mapbox
and Zendesk have done the same, helping Carbon Cure subsidized its costs.
Currently under construction, Amazon's new headquarters in Arlington, Virginia are using CarbonCure's tech.
The company is interested in full-scale carbon removal, though, and is participating in a Department of
Energy-funded partnership with a California-based direct air capture company to convert captured CO2 to 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 annually, and we think we can do that by the end of the
decade.
Another emerging method of permanent carbon removal relies on ocean-based capture and storage.
The oceans store about 88% of our carbon in their chemistry.
Without them, climate change would be far worse than it is now.
Canadian-based Planetary Hydrogen was founded in 2019, and its tech is based on the fact that the relative
concentration of CO2 in the atmosphere and the ocean always remains the same and thus has risen over time.
Because CO2 is an acid, the ocean has become more acidic.
But if we can decrease the acidity of the ocean by lowering 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's derived from rocks, and we
purify that so that it really is just a very mild base and we add that into seawater.
So by just simply adding our antacid into seawater, or neutralizing this acidic CO2, we're
turning it into bicarbonate or baking soda.
And then that stays in seawater for 100,000 years.
And what that means is that because the concentration in the ocean of CO2 is lower now, more CO2
will invade from the atmosphere to balance out that concentration basically.
Planetary plans to start open-ocean trials this year by adding its antacid to wastewater treatment facilities, which
already have permits that allow them to clean up water before it goes into 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 drop to about $75 per ton as the company scales.
Overall, the various ways that Climeworks, Charm, CarbonCure, and Planetary are capturing and storing CO2
represents only a small fraction of the carbon removal tech and development.
Other methods of direct air capture, as well as geologic, biologic and ocean-based carbon storage, are all under
development and are also benefiting from the funding boom.
It's an exciting time to be working in this space, but early stage purchases by tech companies and others will only go so
far.
A billion dollars does not a market make, right?
This is a step in the right direction, but certainly does not get us all the way there.
If you zoom out to 2050, we're going to need, say, 5 billion tons per year of carbon
removal at $100 a ton.
That's $500 billion every single year in customer demand for carbon removal.
And that's a conservative estimate of the amount that we'll need to remove.
But there's no doubt that if we're going to do this to try and address climate change, eventually we're going to have
to just 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 over 20 cities, states and provinces already do have some form of carbon pricing.
Launched in 2005, Europe's carbon market is one of the world's oldest and most well established, and since
2019, every jurisdiction in Canada has set a price on carbon, too.
Even China introduced a carbon pricing scheme in 2021, turning the world's largest emitter into the world's largest
carbon market.
I do think that other international markets are going to play a really key role in how carbon removal companies
scale, but they play a role probably farther out on the cost curve and farther out on the deployment curve.
Many industry leaders hope the U.S.
will implement a federal carbon pricing scheme as well and increase the current tax credit for carbon storage, which is
about $35 per ton of geologically sequestered CO2 at about $22 for CO2 that's used in a product like
concrete. Currently, there are no incentives for ocean-based storage methods because verifying the amount of
CO2 captured with this tech is so hard to do.
The way that you measure a ton of kelp sinking is very different from the way that you measure a ton of bio oil
injection. This is a sort of challenge that we are going to need to solve for carbon removal, and we need to solve it in
a way such that this doesn't go the way that offsets went.
Failed offset efforts, such as forest conservation projects that ended up providing little real benefit, have made the
carbon removal industry highly aware of the need to validate each tonne of CO2 removed.
And while some of these technologies may seem a long way from that, Toone is optimistic.
You've got a market that's growing and costs that are that are diminishing.
And so the question is, where do those cross?
It certainly happens this decade.
Carbon removal does generally enjoy bipartisan support in Washington.
And the Department of Energy recently released a $3.5 billion program to develop four direct air capture hubs
across the U.S., with each one intended to permanently remove over 1 million tons of CO2.
I think that government management of a market happens when people decide that it's cheaper to deal
with the CO2 than it is to deal with the consequences of the CO2.
And there is absolutely a growing awareness of exactly what the costs of that carbon are.