Billion-Dollar Effort Funds Startups That Do More Than Clean Up Carbon

(Bloomberg) -- Technologies that remove carbon dioxide from the air have struggled to gain traction. High costs are a key reason. A group led by Stripe Inc. is trying a different approach to enable breakthroughs: backing startups that not only capture CO2 but create byproducts, including the cleansing of mine sites.

Frontier, a public benefit corporation owned by Stripe, has facilitated its fourth round of carbon removal prepurchases from nine companies on behalf of buyers Stripe, Shopify Inc., Alphabet Inc., Hennes & Mauritz AB and Match Group Inc. Many of the startups are removing carbon while generating useful byproducts, from a startup that spreads rocks over farmland that improve soil health to one that cleans up mine sites while extracting clean metals. 

Creating a technology that captures and sequesters CO2 is not enough for startup success, said Florian Birner, co-founder and managing director of Planeteers, a company that helps wastewater treatment plants manage water acidity and that inked a pre-purchase agreement with Frontier: “There must be a coproduct, whether it's a utilization of CO2 or a beneficial side product.”

A dual-purpose technology can help reduce costs and accelerate scale-up compared to standalone carbon removal projects, according to Joanna Klitzke, procurement and ecosystem lead at Frontier. 

Founded by Stripe, Alphabet, Shopify, Meta Platforms Inc. and McKinsey & Co., the Frontier coalition aims to spend over $1 billion on permanently removing carbon from the atmosphere in an effort to grow the fledgling industry by guaranteeing demand. Frontier vets startups and facilitates purchases on behalf of buyers. 

Most climate models estimate the world will need to remove billions of tons of CO2 from the atmosphere annually to stave off the worst effects of climate change, but so far, startups have cumulatively removed under half a million tons in total. 

Frontier is committing $4.5 million to buy removal services from the nine companies. Though it’s a relatively small amount of money, it’s significant for early-stage startups, for whom Frontier is typically the first customer. Nearly every startup surveyed that Frontier previously purchased carbon removal from reported that prepurchases helped accelerate their growth, sped up research timelines and unlocked future investment, Klitzke said.

The Frontier stamp of approval is perhaps more critical to these startups than the funding itself. Companies with climate goals are increasingly interested in purchasing carbon removal services, said Luke Shors, co-founder and president of startup Capture6, “but they lack the ability to assess these technologies.” 

His company uses waste brine from water treatment facilities to create the solvent for its direct air capture system, both very complex processes for would-be buyers with limited expertise to vet. Unlike other corporate buyers that often rely on intermediaries to vet startups, Frontier has a team of 60 expert reviewers who help evaluate applicants for its purchase programs.

“There's an economic benefit associated with that prepurchase, but there's also the signaling to other companies that we've cleared this hurdle,” Shors said. “I think that's probably as important as the economic benefit.”

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