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14 Apr 2023
Microsoft, Apple, Frontier Extend Support for Carbon Removal
Posted with permission from ESG Impact Zone.
A non-trick question: Should your company invest in carbon avoidance or carbon removal? The answer is obviously both, but contracts linked to the latter — especially for methods that are high-quality and relatively "permanent" — remain ultra-pricey on a per-metric-ton basis.
Slowly but surely, however, corporate support centered on removing excess carbon from the atmosphere is becoming more explicit, as several high-profile announcements showed this week. Apple expanded the focus of its Restore Fund to scale up nature-based carbon removal projects, doubling the amount of money it’s putting toward those approaches. Meanwhile, Microsoft disclosed its latest carbon removal contract Thursday — supporting enhanced rock weathering — and the Frontier carbon removal buyers collaboration gained $100 million more and its first non-tech corporate members.
$1 billion and counting
Frontier, the program founded last spring by Alphabet, Meta, McKinsey, Shopify and Stripe, has topped $1 billion in funding to help bring the per-metric-ton cost of investment closer to earth for projects that come to market between now and 2030.
Frontier is structured as an advance market commitment. That means the program facilitates prepurchases of early-stage carbon removal technologies and approaches by creating the potential for long-term offtake contracts — similar to the corporate power purchase agreements used to help get renewable energy projects off the ground a half-decade ago. Frontier essentially aggregates the demand for these contracts, making it more cost-effective for companies on an individual basis.
The effort launched with $925 million in funding. This week, the group is announcing another $100 million in backing from eight new members, including some big tech and non-tech players — Autodesk, H&M Group, JPMorgan Chase and Workday.
"As the first fashion retailer and European company joining Frontier as a member, we want to inspire others in our industry to follow our example and become early buyers of carbon removal," said Henrik Sundberg, impact lead climate at H&M Group, in a statement.
Two smaller companies, Aledade and Wise, are participating through a relationship that Frontier launched in January with Watershed, a purveyor of carbon accounting and GHG emissions management software. Watershed customers can join Frontier at a smaller financial commitment level. Boom, Canva, Skims and Zendesk have also joined as part of the Watershed relationship. Even smaller companies can participate through the Stripe Climate program, which allows companies using the Stripe payments platform for their business to designate a portion of their revenue for carbon removal initiatives.
So far, Frontier has signed contracts with 15 companies across seven "pathways" including enhanced weathering (five projects), direct air capture (four), mineralization (two), biomass burial (one), bioenergy with carbon capture and storage (one), direct ocean capture (one) and synthetic biology (one). The collective impact of those projects is $5.6 million in contracts, with 8,993 metric tons of removal under the contracts that have been made public.
Hannah Bebbington, strategy lead at Frontier, said the ultimate goal is to encourage approaches that can store excess atmospheric carbon for at least 1,000 years without reyling on arable land. The holy grail price point that many believe is required for mainstream corporate participation is $100 per metric ton. While Frontier hasn’t disclosed what its members will be paying, some of these projects currently command up to $2,000 per ton. "Buyers are looking for high-quality removal, knowing they are going to be buying [the price of] these tons down the cost curve," Bebbington said.
The biggest prepurchases made so far by Frontier are for projects being developed by two companies working on mineralization. It has committed to 1,269 metric tons from Carbon to Stone of Ithaca, New York, which is working on a process to mineralize alkaline wastes such as steel slag, creating carbonate materials for use in alternative cements. And Frontier has prepurchased 2,198 metric tons from Cella, a company based in both New York in Nairobi that is injecting CO2 into volcanic rock in combination with saline water and geothermal brine waste.
Bebbington said Frontier is receiving inbound interest from outside the tech industry and the U.S. "That diversity is super important," she said.
Apple's goal is to invest in projects that can remove 1 million metric tons of CO2 from the atmosphere each year while generating financial returns for investors.
Apple adds $200 million, Microsoft signs contract in UK
Diversity outside tech is certainly important, but some of the biggest brands in technology continue to be the biggest backers of carbon removal projects.
Apple continues to bet on nature-based approaches with the addition of $200 million for its Restore fund, which it launched in 2021 with Conservation International and Goldman Sachs. The new money will be managed by Climate Impact Management, a joint venture of HSBC Asset Management and Pollination.
The goal is to invest in projects that can remove 1 million metric tons of CO2 from the atmosphere each year while generating financial returns for the investors. (The focus of the first fund was on working forests, native forests, grasslands and wetlands.) The expanded funding will be for two types of projects: "nature-forward" agricultural projects that center on sustainable farming practices and ecosystem restoration initiatives with measurable outcomes. To monitor the projects, Apple will use these technologies: Space Intelligence’s Carbon and Habitat Mapper, Upstream Tech’s Lens platform and satellite imagery from Maxar Technologies.
The focus of Microsoft’s latest carbon removal is also linked to agriculture. It has contracted for 5,000 metric tons of removal over the next 20 years using enhanced rock weathering technology from Undo, a U.K. company. Under the agreement, Undo will spread 25,000 metric tons of basalt rock on farmland across the U.K. The credits tied to the project were sold using methodology endorsed by the International Carbon Reduction and Offset Alliance. Microsoft will take a part in funding the technology used to measure, report and verify the impact.
"Enhanced rock weather offers a great deal of potential, and we are excited by the prospect of having this nature-enabled approach as an additional pillar of our permanent carbon removal portfolio," said Rafael Broze, engineered carbon removal lead at Microsoft, in a statement.
Not just the usual suspects
I’ll end by mentioning another development in corporate carbon removal contracts this week that is notable not for the size of the commitment but for the fact that it was made by a company smaller than the other headliners.
The deal involves Ledgy, a London-based company that makes a platform companies can use to manage corporate equity plans, and SeaO2, an ocean-based carbon capture startup from Amsterdam. The agreement calls upon Ledgy to prepurchase six metric tons of removal from SeaO2’s first prototype, located in the North Sea. The contract is worth "only" $23,722, but it represents the sort of corporate support that these projects require to stimulate funding and more investment.
"What excites us most about SeaO2’s business model was the team’s clear progression plan from a first working prototype this spring through extracting thousands of tons per year by 2025," said Ben Brandt, co-founder and chief product officer of Ledgy, in a statement. "At Ledgy, we believe entrepreneurs are going to be central to solving the world’s most pressing challenges. That’s why we think opting to contribute early on to SeaO2’s research and development is a more worthwhile way to compensate for our emissions as a company, aiming for maximum long-term impact instead of short-term offsets and grand claims of carbon neutrality."
Image from ESG Impact Zone.
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