Carbon-removal startups win early backing from Stripe

Stripe and Shopify pledged €10.8m to startups working on ways to sequester greenhouse gas

Right now, only Shopify and Stripe, led by John and Patrick Collison, have made financial commitments to companies extracting carbon from the air.

A new group of early-stage carbon-removal startups received pledges of $11.5m (€10.8m) from Stripe and Shopify as the Silicon Valley companies continue their effort to create a robust market for technologies that remove carbon dioxide from the atmosphere.

This is the second batch of startups working on ways to sequester greenhouse gas, such as storing CO2 deep in the ground or pulling it out of the ocean, that have won support from Frontier, a $925m (€869m) effort started last year, inspired by similar projects at the two technology giants. 

The goal is to select promising carbon-removal companies and to help them get off the ground by committing to be an early customer — often the first ever for these startups — or by providing research grants.

The announcement on Thursday included funding for nine startups doing work in the US, Kenya, Brazil, Germany, Canada and Australia. They include Captura, which removes CO₂ from the ocean; Cella, which is mineralising CO2 by injecting it into volcanic rock formations; and Kodama Systems, which is burying biomass thinned from forests to prevent it from decomposing. 

In June, Frontier selected six companies out of 26 applicants for its initial round.

Carbon removal technology is in the nascent stages and remains quite expensive. But climate experts project that by 2050, in order to meet net zero goals, the world will need to be removing 5bn tons of carbon from the air each year. That leaves an enormous gap to close in the decades ahead. The technologies to do so need to be developed, and the price of removing a ton of carbon needs to drop drastically.

With this second round of startups, Frontier is providing research grants to two recipients and promising to pay a total of $3.5m to seven others in the form of a “pre-purchase agreement” while the technology is still developing. Another $7m (€6.6m) is set aside to buy more from those seven companies if they meet certain milestones. 

Right now, only Shopify and Irish payments firm Stripe have made financial commitments to these companies, although Meta, Alphabet and McKinsey & Co have agreed to buy carbon removal through Frontier when the companies are more mature.

Nan Ransohoff, the head of Frontier and of Stripe’s climate projects, said the commitment to Frontier is nothing compared to what might have to be spent in the future to remove enough carbon from the air — by some estimates as much as $500bn a year. 

At that size, either governments will have to be buying carbon removal directly or other major policy changes will be needed.

• Bloomberg