E-commerce company Shopify is betting carbon removal technologies — such as direct air capture or mineralization or ocean alkalinity enhancements — will help the company achieve carbon-neutral status over the long term.
So far, it has committed close to $55 million through its Sustainability Fund, set up four years ago, to support renewable energy procurement, green building investment and carbon sequestration. Those initial bets will remove 84,400 metric tons of CO2, said Shopify head of sustainability Stacy Kauk in a mid-December update.
I interviewed Kauk to dive deeper into what the company has learned so far. You can read the key takeaways here. What follows are excerpts from our chat on what makes carbon removal offtake deals different from clean power agreements, and why it’s worth paying more now to lock in supply for the future. The interview was edited for clarity and length.
Heather Clancy: In 2024, how will the Shopify team support faster carbon removal project development?
Stacy Kauk: That's what gets me excited because faster carbon removal project development is really one of the problems, or one of the friction points, we've observed in 2023. Things are getting difficult because they're getting real, right? We have projects that have to get permits, we have wells that have to be drilled, we have facilities being built in Iceland … The climate gives you a certain number of construction days, and the rest [of the time] it's snow and rain and sleet, and things are going to be slower than you've planned. So there's all of these factors, because we're doing things for real now, things are slowing down.
Things are getting difficult because they're getting real, right?
As a buyer, you might think, "Oh, there's not much we can do. We're just waiting for our credits, and then we'll make some payments." But one thing that [Shopify brings] to the table is we like to work with our fund companies and have a real partnership where we help them … communicate the value and give them advice on how to sell more credits to other buyers, so that they can get some more revenue. We have a unique offering, called Planet, which enables our customers to offer carbon-neutral shipping. They do that by buying from the same suppliers we've already vetted in our fund, which means that there's a little bit more demand happening.
Clancy: Why are contracts for carbon removal "offtakes" different from offtake contracts for renewable energy?
Kauk: When it comes to a renewable energy contract, you're usually agreeing on a strike price, right? … When they sell the electricity into the grid, if the price that they're able to get is higher, the [corporate] offtaker makes the money. If the price is lower, the offtaker pays … so the project is still economically viable [because the energy vendor is shielded from the price decline]. In the renewables market, the key structure is price certainty, so there's no risk from a financial perspective for that project.
When we get to a carbon removal offtake, we're not trying to prove we are providing a price guarantee [to the developer]. [Today, the price] is not based on a market, so we'll always be paying [to provide future revenue certain for the developer, which is required for investors]. That's a critical difference, but you can see how this will fit as the structure in the longer term. … If the voluntary [carbon] market gets absorbed into a fully regulated global carbon market, we would then be providing price parity. That's the big difference today.
Clancy: I have been hearing more about insuranc
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