Frontier carbon removal fund makes new $46.6 million direct air capture purchase

Tope Alake, Bloomberg November 16, 2023

(Bloomberg) — An effort backed by companies including Stripe, Alphabet Inc. and JPMorgan Chase & Co. has locked its first major contracts with startups that use machines to remove carbon from the air. 

Members of the effort, dubbed Frontier, will pay a total of $46.6 million to CarbonCapture and Heirloom. The two startups will be responsible for pulling 45,500 and 26,900 tons of CO2 out of the atmosphere respectively over the course of the deals. The cost includes the measuring, reporting and verification to ensure the startups deliver on their promises.

CarbonCapture and Heirloom have separately developed machines that can draw CO2 from ambient air, a process known as direct air capture (DAC). That CO2 is then permanently stored using different methods. The deals with Heirloom and CarbonCapture are Frontier’s first DAC offtake agreements, which the group says are “legally binding contracts to buy future tons of carbon removal at an agreed price if and when delivered.” CarbonCapture promises to cut costs per ton by at least 46% over the course of the agreement, which runs until 2028. Heirloom forecasts a 70% price reduction by the time its deal with Frontier wraps at the end of the decade. 

Frontier’s plans to spend roughly $1 billion on carbon removal services by 2030, and the new deal is a signal to startups in the nascent field that there is a market for their services. The group previously entered into an offtake agreement with Charm Industrial, a startup that sequesters bio-oil underground, to remove 112,000 tons of CO2 by the end of this decade.  

Removing carbon from the atmosphere remains an expensive process. That’s particularly true of DAC, which currently costs hundreds of dollars per ton. Bringing down the price of carbon removal to $100 per ton is a key price benchmark given the world will likely need to remove billions of tons of CO2 from the atmosphere annually by mid-century if it’s to limit global warming to 1.5C. BloombergNEF forecasts that the market for removal can grow to nearly $1 trillion by the mid-2040s under the right conditions.

Frontier is one of a number of efforts afoot to boost the young industry. Last week, Heirloom opened the first commercial DAC plant in the US. The startup will also be part of a major research hub in Louisiana backed by the Biden administration and anchored by Climeworks, another DAC company. The so-called DAC hub is expected to pull 1 million tons of CO2 out of the atmosphere annually by 2030. CarbonCapture is involved in a smaller regional hub funded by the Biden administration.

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