Stripe, Alphabet, Shopify, Meta and McKinsey partner on carbon removal

Stripe, Alphabet, Shopify, Meta and McKinsey have committed US$925 million to accelerate permanent carbon removal technology development over nine years.

The founding companies today launched Frontier, an advanced market commitment (AMC), to create new carbon removal supply, and guarantee future demand.

Frontier is a wholly owned subsidiary of Stripe and will be funded by businesses purchasing carbon removal using Stripe Climate.

According to Nan Ransohoff, head of climate at Stripe, “With Frontier, we want to send a loud demand signal to entrepreneurs, researchers, and investors that there is a market for permanent carbon removal: build and we will buy.”

The AMC model was first deployed in vaccine development over a decade ago, during the development of pneumococcal vaccines for low-income countries.

Carbon removal is set to experience similar challenges due to unproven technologies and uncertain future demand. But with radical emissions reductions needed now, the AMC will assist in creating an immediate demand signal without a final decision on the technologies at play.

According to Kate Brandt, chief sustainability officer at Google: “At Alphabet, we know firsthand from our long-standing history of working to advance new climate solutions that signalling early demand can spur innovation and lower the price for everyone. That’s why we are joining this exciting coalition of climate leaders, who jointly see the promise of new carbon-removal technologies and the power of sending a clear demand signal to the market.”

The IPCC’s latest report reveals that global temperature increases cannot be kept within 1.5 degrees Celsius, without the permanent removal of approximately 6 billion tons of CO2 already stored in the atmosphere and oceans, by 2050.

However in 2021, less than 10,000 tones of carbon dioxide had been permanently removed.

According to Dickon Pinner, senior partner and co-leader of McKinsey Sustainability: “Our research shows that the amount of carbon removals needed by 2025 to achieve the IPCC’s 1.5°C pathway will be missed by 80 percent, based on the current pipeline of projects. Frontier will play a catalytic role in enabling the supply of high quality carbon removals.”

For early-stage carbon removal suppliers Frontier will facilitate low volume pre purchase agreements for buyers, and for growth-stage suppliers Frontier will facilitate offtake agreements that promise future tons of carbon removal. This enables suppliers to secure financing in order to scale their efforts.

Frontier will conduct due diligence on behalf of buyers, seek to identify technologies with the greatest long-term potential and assist them to scale.