These last few weeks have been utter euphoria for those in the Carbon Removal space. This is the sector of climate action that aims to remove carbon back out of the atmosphere as a critical component of our fight to reduce global warming. Here are three such gigantic deals that were just announced:
- $975M was put into Frontier, an advanced market commitment to buy carbon removal from Google, Facebook, Shopify, Stripe, and McKinsey
- $650M funding round into Climeworks, the largest Direct Air Capture company today
- $375M carbon removal fund from Lowercarbon Capital, a climate focused VC founded by Twitter/Uber billionaire investor Chris Sacca
- The US Infrastructure and Jobs Act includes $3.5B for 4 Direct Air Capture hubs
As a quick recap our readers probably don’t need, we’re on a really bad trajectory when it comes to hitting our global warming targets. Not only are we way off base to keep warming at 1.5C (Celsius) above pre-industrial levels as stated by the Paris Accord, we are actually on pace for over 3C of warming, which would like wipe out 40% of our coastal cities (underwater) and displace 50% of the global population as their current homes would essentially be no longer livable. Not good.
There are many critics who worry lowering emissions is not enough to hit our goals, mostly because we haven’t really yet shown the ability to do so or political will to set us on a faster course for doing so. And thus there is increasing belief that carbon removal will have to be a big part of our future strategy. Today we are removing ~10,000 tonnes per year of carbon with existing technology, which is barely a rounding error compared to the 40+ billion tonnes we emit per year. The goal of the carbon removal sector is to get this to 5 to 10 billion tonnes removed by 2050. Whether that’s possible and what the economic, social, and environmental costs of getting there will be is very much up for debate.
The most significant of these announcements probably being Frontier. What an Advanced Market Commitment (or AMC) does is pre-buy carbon removal ahead of the actual technology being ready in order to spur investment into the supply side of the market – those removing and storing the carbon. By making these funds available upfront via offtake agreements, which have a set price and volume, carbon removal tech companies can collateralize that at a bank to fund their development and operations.
With that commitment and the others coming, it’s officially game on for the world of carbon removal. Have we set ourselves up on a promising path or a concurring one? Today we break that down a bit.
CARBON REMOVAL 101
It’s first important to understand that there are some different approaches to carbon removal. Before we get into those, let’s remind ourselves that our oceans, soil, forests, and biomass (which includes species) currently sequester roughly half of all the carbon we emit per year completely naturally. They would be even more productive in doing so if we weren’t shitting all over their ability to do so. Fertilizers, deforestation, ocean pollution, biodiversity collapse and of course global warming itself have put all these natural systems in a high stress state. One could argue the best path forward for carbon removal is to stop getting in the way of the natural systems set up to do so, and trust me we’ll circle back to this.
We bucket the carbon removal space into 4 distinct categories:
- Augmenting our natural systems
- Partnering with our natural systems
- Capturing emissions at the source
- Direct Air Capture
Ok so how about a mini breakdown and analysis of each of these things.
1. Augmenting our natural systems
This is something that is pretty easy to get behind, since it’s really helping nature do its job better which can also have a positive impact on biodiversity, ya know, that other existential threat alongside global warming that never gets talked about enough.
A good example would be a company like Running Tide, which is part of Frontier’s target portfolio of suppliers. They are essentially growing kelp forests in the ocean that naturally sequester carbon and then over time sink down to the ocean floor as valuable biomass, feeding plenty of marine critters along the way and providing useful habitat. We are very pro kelp here at Animalia, both as a carbon removal tool and source of food given its highly regenerative nature.
Another example would be the $1B pledge in the Infrastructure and Jobs act to support farmers who are maintaining strong standards of soil health. Healthy soil is a valuable source of carbon sequestration, and requires ending the use of fertilizers and pesticides.
We love this category, although this is not the category where the carbon removal lovers are thinking about getting their scale. Well, I should say we mostly love this category. This category also includes the current gold rush that is planting trees whenever possible to accelerate carbon sequestration from our forests. Only problem here is that we are planting too many trees in the wrong places, displacing local communities in doing so, and not setting up forests for long term success. We have an entire podcast episode coming out in 2 weeks with a renowned expert in reforestation to discuss this in more detail so stay tuned!
2. Partner with our natural systems
This might seem similar to category #1 above, but has a slight difference. This is where we are building carbon removal approaches that work alongside nature as partners for solutions that require a bit more tech and energy use but still very much reliant on natural processes.
A couple good examples of this are bio-oil injections and mineral weathering.
Charm is an example of a company doing bio-oil injections. In a nutshell, they take agricultural residue – the unused portion of feedstock – convert it into a bio-oil, and inject that oil back into the ground using the same wells we used to extract it in the first place. In theory this makes sense, although one would want to evaluate the efficiency of this use of agricultural waste vs. other applications such as turning it back into healthy soil for farming or other applications like Kintra Fibers is doing in turning it into synthetic fibers to get the apparel industry off petroleum.
Enhanced weathering is essentially accelerating the natural process of how rainwater reacts with rocks and locks away CO2 in carbonate form. The Future Forest Company & Eion are two such examples here.
We also feel this sector has potential but needs more careful analysis. Is bio-oil the best use of agricultural residue? Can enhanced weathering meaningfully scale? Neither is fully proven out yet but it’s important we investigate and pursue.
3. Capturing Emissions at the Source
Ok so with #3 and #4 is where we start to veer into potentially problematic territory on one hand, and potentially meaningful on another. Really depends on how it all shakes out.
For decades, fossil fuels companies have championed the promise of capturing emissions at the source as they are emitted. In fact, the plan coming out of global summits on climate in the early and mid 90s essentially all relied on this. Only, it never really materialized.
The question here is not the technology but more so the incentive structure. Would capturing carbon at the emission source enable the fossil fuel providers to keep going as is vs. switching to renewables. Because there is still a question of where we store all that carbon anyhow which we will get to in category #4.
To be fair, with Frontier and their partners, there are no signs of buying carbon removal from the fossil fuel capture world. So that’s a good thing.
There is some aspect of this category in their partner plans such as capturing emissions at industrial manufacturing processes – such as creating cement – that can then be used back into the very same processes. Sort of like recycling and reusing carbon. That has promise indeed, but has not proven out it can scale either. It’s also worth noting there are technologies to altogether create alternate, more sustainable ways to create things like cement that may be better solutions, although those too have not proven they can scale.
4. Direct Air Capture
Which brings us to the 4th and for us most concerning category. And for carbon removal optimists, the most important one. It’s also the one getting the most funding and most attention, highlighted by the $650M funding round alone in Climeworks.
Direct Air Capture is the process of trying to remove CO2 right out of the air. Now this is hard. CO2 makes up only 0.04% of the molecules in air. So the process for extracting it is very energy intensive. Big vacuums suck in air, then use chemicals called sorbents to bond with the CO2, and then heat to 100C to release that captured CO2 into a separate container and spit the air minus the CO2 back into the atmosphere. Scientifically this is very cool.
The largest DAC plant in the world today, operated by Climeworks, captures 4,000 tonnes of carbon per year. This is because the current state of the technology is highly energy inefficient. Right now it requires more energy to capture a tonne of CO2 in this way than what is created/used to emit it in the first place. It’s also economically inefficient. Today it would require roughly $10 trillion per year in spending to meet the 5 billion tonnes of carbon capture per year the removal sector aims to achieve.
Like all technologies, it should get cheaper and more efficient over time. That is the rationale behind those betting on DAC in a big way, which Frontier is doing. We have to invest ahead of efficiency in order to get there. However even once we do, the plans to store it at scale are also pretty speculative and energy intensive. The most popular being to store it in larger underground geological systems where it can turn into carbonate material. This makes sense in theory, but the ability for us to do this at scale is very much to be determined.
We view DAC similar to how we view nuclear fusion. Incredible potential in theory, but technologies that today require far more energy to power than they create (in the case of fusion) or capture emissions from (in the case of DAC) with no clear timeline of if and when they will get to an efficient, usable state. It’s important we do invest in them to see if we can get there, but no companies or governments should be getting “credit” for these investments in the short term when it comes to offsetting emissions.
Which brings us to our conclusion.
THE VERDICT ON CARBON REMOVAL
The biggest concern we have, and this is a very real one, is that investment and focus on carbon removal will come at the expense of maximizing investment and focus on lowering emissions and maintaining biodiversity and ecosystem health.
We balk at the claims “there is no way to hit our global warming targets by lowering emissions alone”….that is simply not true. It only seems unrealistic because we continue to struggle with key projects to advance renewable energy, such as increasing transmission capacity, and getting off large scale, industrialized monoagriculture.
Moreover, if we put as much funding and priority into protecting our natural ecosystems that do a bulk of sequestration on their own, and limit the extraction for resources to only those things that are needed to also transition off fossil fuels – such as mining nickel – we honestly wouldn’t need categories 2 through 4 in the carbon removal sector.
That said, hitting those emissions targets and protecting our ecosystems enough may not be doable given the geopolitical challenges of doing so. So investing now in carbon removal technology is a valuable buffer in event we do end up needing it, which may be the case.
Doing so should not come at the expense of taking our eye and dollars off the ball of lowering emissions and mitigating biodiversity collapse. That is where we are concerned. That what is happening in Direct Air Capture, for example, is the largest corporations are putting their dollars to work here rather than, say, renewable energy power purchase agreements, this money is just being funneled to well capitalized startups that have not yet proven out their solution. This is money that could also be going to purchasing tropical forests to give their ownership back to Indigenous communities for example, probably our best solution for slowing forest degradation and deforestation. That just doesn’t produce enough immediate economic ROI in our current financial system, sadly, compared to buying and selling carbon removal credits.
Even our own US government is now officially spending more in the Jobs Act on Direct Air Capture ($3.5B) compared to reforestation ($2.5B) and improving soil health ($1B).
Investing in carbon removal technologies is important. However it should not come at the expense of investing in reducing emissions and protecting/restoring biodiversity. Carbon removal needs to have completely different standards and goals compared to lowering emissions, rather than combining them together in a rather bullshit “pursuit of net-zero” via more accounting than science.
To their credit, Frontier shares some of this sentiment. That a corporate race to net-zero is not and should not be the goal. That carbon removal investment should not come at the expense of emission reduction investment. It’s also good to see them buying carbon in categories 1 and 2 and not just 3 and 4.
Again we are quite bullish on everything except for Direct Air Capture & capturing carbon at the source of emissions given this really feeds a continued reliance on fossil fuels. We are still supportive of investing in DAC and seeing if it can get to efficiency at scale so long as it is no longer part of the same goals of lowering emissions and protecting biodiversity.
A CANADIAN RIVER IS NOW LEGALLY A PERSON
The Magpie River in Quebec’s Cote-Nord region has been granted legal personhood. This comes with rights for the river. Rights to be free from pollution, rights to sue, rights to flow, and rights to maintain biodiversity amongst others. This is the result of a long campaign led by the Innu First Nation Peoples, who have always recognized the Magpie River amongst many other natural resources as one with individual rights. Their name for the river is Mutuhekau Shipu. This is a big step forward in protecting such natural ecosystems, but also presents a challenge to those that want to utilize it for renewable energy projects, such as hydropower, a source of energy that has often displaced and harmed indigenous communities due to its impact on river flow. Expect to see more of this in the United States as well. This is also yet another example of the challenges ahead of protecting biodiversity, restoring Indigenous rights, and pushing our transition off fossil fuels which very much depends on resource mining and new transmission construction. All of these things are important and we’ll have to work together to find the balance to make sure we keep pushing them all forward.
BIDEN GIVES THE GO AHEAD TO DRILL FOR OIL & GAS ON PUBLIC LANDS
Score a victory for the oil and gas industry and a big loss for the planet, and let’s be frank, on Joe Biden himself. Biden and the US oil & gas industry have been in a game of chicken for months, initially triggered by rising gas prices earlier this year and then accelerated by the Russian War on Ukraine that drove them up even further. Oil and gas companies have been sitting on excess supply that could immediately provide some relief on prices, the same prices that scored them a record $80 billion in profits in 2021, refusing to put more in the market unless some of the limitations on long term development were lifted from Biden’s Climate Plan. Well they got their way. Biden green lit new drilling on federally protected lands last week as part of a plan to add more supply and lower gas prices alongside a higher royalty rate to the government, as if that matters when you are making that kind of profit level. This is a big L for big Joe. While we understand his hands were a bit tied in this decision given the outrageous gas prices ahead of a midterm election, part of the reason he found himself here in the first place was due to a bit of a reckless spending plan last year that added to the inflation hike. While other factors like the pandemic recovery and corporate price fixing also play big roles in inflation, so did Joe. What we are seeing is that as Biden and his team falter on non-climate issues such as inflation, Afghanistan, and the messy response to the COVID surge last summer, his ability to push the much needed climate agenda forward suffers.
OUR US WETLANDS ARE WORTH TRILLIONS…..IF INTACT
This is a great study on the economic value of our wetlands. They serve upwards of $3 trillion in value in flood mitigation alone via their role as natural water sinks to soak up storm water. A great example of this was Hurricane Harvey in Houston in 2017 that caused record breaking flood damage primarily because Houston had spent 2 decades building more and more property on top of its natural wetlands with zero forward thinking on what would happen in the event of a flood. Good job Houston. Yet we still continue to encroach on the wetlands we have left. That number is just their flood mitigation value. Wetlands serve hugely valuable roles in water quality, biodiversity, as carbon sinks, and much more. It’s about time we put economic price tags on our natural ecosystems so we capitalism can go to work in protecting them instead of exploiting them.