Stripe's initial $1 million investment in carbon removal in 2020 has evolved into a $1 billion initiative. The fintech giant, which facilitated $1 trillion in transactions in 2023, has rallied approximately 300 companies to pledge substantial funds for carbon removal credits. Spearheading this initiative is Nan Ransohoff, who drew inspiration from the pharmaceutical industry to provide future buying signals for carbon removal researchers.
Aerial view of newly planted forest. AI generated picture.
Ransohoff, alongside a dedicated team at Stripe, manages Frontier, a $1 billion fund supporting early-stage carbon removal projects. Frontier has secured backing from major corporations like Alphabet, Meta, McKinsey, and Shopify, with additional funding from JP Morgan, Salesforce, and Watershed. Stripe's customers also contribute by allocating 1% of their transaction revenue, adding tens of millions more to the initiative.
Frontier employs an ‘advance market commitment’ model, securing pre-purchase contracts with startups that deliver verified carbon removal credits. This approach assures investors of a market for emerging technologies. To date, Frontier has signed nearly $320 million in contracts, facilitating the removal of over 571,000 metric tonnes of carbon dioxide.
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The team focuses on durable and scalable carbon removal methods, prioritising technologies that promise long-term storage and cost reductions. Currently, the cost of carbon removal remains high, but Frontier's strategic investments aim to drive down prices. For instance, costs with Charm Industrial, a biomass-to-bio-oil company, have the potential to decrease by 75% by 2030.
While some funded projects have successfully delivered carbon credits, not all ventures will succeed. However, the risk is mitigated by contracts that only pay for verified removals. The broader carbon removal market is gaining momentum, with similar initiatives like NextGen and significant corporate buyers like Microsoft pushing forward.
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Stripe's Frontier is expected to operate until 2030, by which time the market should be self-sustaining. To further accelerate growth, Stripe helped establish the Carbon Removal Alliance in 2023 and is expanding its fellowship programme to foster demand-side policies and innovations.
Ransohoff emphasises the importance of a comprehensive demand-side strategy, stating, ‘At the end of the day, we have to sort out what we think it’s important so that the world thinks about how to place enough benefits now.’
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