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Carbon Removal Q&A With Nan Ransohoff
Stripe's Head of Climate Joins Us to Talk About Pulling Carbon Out of the Air
We’re fans of both Stripe and Carbon Removal here at Not Boring — our favorite optimistic take is that we might not have enough carbon in the atmosphere in a century — so when the Stripe team reached out about the videos they were working on with three Carbon Removal companies and asked if we wanted to do a Q&A with their Head of Climate, Nan Ransohoff, we jumped at the chance. I remember reading about Frontier — the $925 million advance market commitment to accelerate carbon removal funded by Stripe, Alphabet, Shopify, Meta, McKinsey, and Stripe Climate’s customers — when it first launched and being impressed with the model’s potential to pull forward big solutions. It’s like a Field of Dreams commitment: if you build it, we will pay.
This is the first Q&A we’ve done like this. Let us know what you think. If you like it, we can do more Q&As with people doing optimistic things in 2023.
What is Frontier and what is Stripe’s role in the initiative?
Frontier is a $925M advance market commitment to accelerate the development of carbon removal. It’s funded by Stripe, Alphabet, Shopify, Meta, McKinsey, and tens of thousands of businesses using Stripe Climate.
It started with a small experiment back in 2019, when Stripe committed to spend $1M buying permanent carbon removal. The idea was not to buy the cheapest tons we could find, but to instead be an early customer for promising new solutions that had the potential to be low-cost and high-volume in the future, even if they’re expensive today. We bought carbon removal from four companies, spending up to $775 per ton.
After making that announcement, two things happened. First, the carbon removal community had an almost strangely positive reaction, which, to us, was mostly a testament to how starved this field had been for customers ($1M is quite modest, especially in the context of climate more broadly). Second, we started hearing from Stripe users who essentially said: “we’ve wanted to do something in climate but haven’t had time to figure out what to do. If we send you money for carbon removal, could you figure out what to do with it?”
These two things formed the genesis of what’s now called Stripe Climate, which makes it easy for any business to direct a fraction of their revenue to carbon removal. Two years later, more than 30,000 businesses from 40 countries have enrolled.
While a good start, it quickly became clear that carbon removal was still nowhere near on track to get to climate-relevant scale. Frontier was born out of that realization. Our hypothesis was that by sending a loud demand signal to entrepreneurs and researchers, we might be able to help ‘pull’ carbon removal solutions into existence more quickly. Knowing we couldn’t do this ourselves, we teamed up with Shopify, Alphabet, Meta and McKinsey to pool pledges and tell carbon removal entrepreneurs: build, and we will buy.
What is carbon removal and why is it important?
Humans emit about 50 billion tons of CO₂-equivalents every year. To avoid the worst effects of climate change, we need to get global emissions to net zero emissions by 2050. That means broadly doing two things.
First: radically reducing the amount of CO₂ we’re pumping into the atmosphere every year.
Second: permanently removing huge amounts of carbon dioxide already in the atmosphere and ocean. Carbon removal is important both because it’s unlikely we’ll be able to fully eliminate all sources of emissions, and because, even if we did, we’d still need to deal with the CO₂ that’s already in the atmosphere from the last 100+ years. Most climate models estimate we’ll need to remove around five to ten billion tons per year by 2050, roughly the equivalent of the United States’ annual emissions.
While some temporary carbon removal solutions exist today–like planting trees—it’s highly unlikely that these solutions by themselves will get us all the way there, in part because we’ll run out of arable land.
We need to develop a portfolio of permanent carbon removal solutions that we don’t yet have. This could look like anything from using giant fans to capture CO₂, to turning waste biomass into bio-oil and injecting it underground, to kelp sinking in the open ocean. thousand tons of CO₂ have been permanently removed from the atmosphere.
Historically, what have been the challenges with carbon removal?
A key reason permanent carbon removal is behind is that there has been legitimate uncertainty about whether there will be customers to pay for it. Unlike renewable energy, carbon removal has no immediate use to the buyer. Governments and companies might consider carbon removal to fulfill their net-zero emissions pledges, but there are cheaper options that satisfy commitments as they are written today. So even though permanent carbon removal is critical to meeting climate goals, current guidelines do not explicitly reward it.
Furthermore, the carbon removal solutions that do exist have faced a chicken-and-egg problem. As early technologies, they’re more expensive, so they don’t attract a critical mass of customers. The problem is, without customers, these companies can’t scale to reduce their costs. Not only that, but investors don’t want to invest in companies that don’t have revenue. So without customers and investment, the carbon removal ecosystem has been stuck.
What is Frontier’s approach to galvanizing carbon removal initiatives?
Frontier’s approach of guaranteeing demand for a new product is called an advance market commitment (AMC). The idea is to send a signal to researchers and entrepreneurs that there will be a market for a product, giving them the confidence to start building now.
AMCs are a concept we borrowed from vaccine development. In the early 2000s, low-income countries lacked access to the pneumococcal vaccine. Pharma companies weren’t motivated to spend resources developing a low-cost vaccine because they were unsure there’d be enough demand to recoup their costs. So governments and philanthropists came together and pooled $1.5bn in subsidies. Their promise was: if the pharmaceutical companies could produce the vaccine at low cost, they’d have customers to pay for them. The program delivered hundreds of millions of doses, and by some estimates saved almost a million lives.
Frontier is conceptually similar. Stripe, Alphabet, Shopify, Meta and McKinsey have pooled an initial $925M of demand to buy permanent carbon removal over the next eight years. Frontier’s team of technical and commercial experts vet suppliers to identify the most promising technologies, and then facilitate purchases between buyers and suppliers. Frontier offers pre-purchase agreements to early stage companies and offtake agreements to larger, more mature companies looking to scale. With guaranteed customers, suppliers can secure the financing needed to build their next plant, and more generally, to scale up.
An important feature of AMCs is that they allow you to send a ‘technology neutral’ demand signal. In the case of Frontier, we’ve defined what ‘great’ looks like in our target criteria (>1,000 years of permanence, path to <$100/ton, path to >0.5Gt/year, etc.) and we’re open to any solution that meets our criteria. In other words, we can signal a $1B market without needing to pick a winning technology right out of the gate.
What does the world look like in 10 years if Frontier is successful? 50 years?
Our goal at Frontier is to get carbon removal on its best possible trajectory by 2030. The field is so early that it’s impossible to know exactly how big or how cheap permanent carbon removal can be in the coming decades. But what we can do now is create the conditions that give carbon removal the best possible chance of getting to climate-relevant scale. This is the decade to find and try the most promising ideas. Many of them won’t work, and that’s OK. Let’s learn that now so that by 2030 we have much higher confidence in what the portfolio of carbon removal portfolio solutions will look like, and at what collective scale.
Our hope, of course, is that carbon removal ultimately scales to billions of tons every year by 2050.
If our readers want to contribute their skills to the carbon removal field, where do they start?
We recently published an editable database of 100+ carbon removal knowledge gaps that, if filled, would accelerate the development of the field. Each gap is tagged with the types of skills likely needed to fill them—data science, AI, law, electrical engineering, microbiology, etc. Our hope is that by making these gaps more visible, and by making it easier for experts without CDR-specific knowledge to figure out where to plug in, we might be able to fill them faster.
Thanks for reading,
Packy & Dan