Stripe launched a service this week that lets companies pre-order "offtake" contracts for carbon removal projects. Climate Orders will be offered to companies that want to generate certificates to offset their emissions. The contracts will fund carbon removal projects vetted by Frontier, the $1 billion buyers group Stripe co-founded with Alphabet, Shopify and Meta.
Climate strategists believe technologies that draw down levels of atmospheric carbon dioxide, such as those offered through the new Stripe service, will be necessary for reaching net zero in the next two decades. Boston Consulting Group predicts annual demand will reach 40 million to 200 million metric tons of carbon dioxide by 2030. That’s far more than the current capacity of existing projects, BCG said, and yet less than what’s needed to halt climate change. The Intergovernmental Panel on Climate Change estimates that the world needs to remove 5 to 10 gigatons of atmospheric carbon annually by 2050 to reach net zero.
The idea behind Stripe’s new service is to get more companies with emissions reduction goals to finance carbon removal solutions at an early stage. Those early commitments accelerate deployment, said Lauren Polansky, climate product manager at Stripe. "Early buyers are so essential to help carbon removal tech scale and become more affordable," Polansky said.
Few companies have jumped into the market, but purchases are starting to pick up. American Airlines, for example, became the first customer for carbon removal startup Graphyte earlier this week. "Hard-to-abate industries like aviation will need high-quality, permanent, affordable and scalable carbon credits — including removals — to achieve our emissions reductions goals," said Jill Blickstein, the airline’s chief sustainability officer, in a statement.
Many companies have been hesitant to invest in contracts for carbon removal projects over concerns that they’ll be paying too much and that costs will come down, said Karan Mistry, lead member of BCG’s climate and sustainability, energy and public sector practice. Uncertainty over how to account for carbon removal credits is also a sticking point. "Currently, there is no global alignment over what [carbon dioxide removal] technologies count, and potential buyers are concerned about making expensive decisions that don’t ultimately help them achieve their net-zero goals," he said.
Contracts signed with a few clicks
Read More
