Fintech company Stripe has linked up with Alphabet, Shopify, Meta and McKinsey Sustainability to accelerate the development of carbon-removal technologies.
The companies agreed an advance market commitment to buy $925 million of permanent carbon removal by 2030 from companies building new solutions.
The nine-year commitment will help fund the development of the technologies by guaranteeing future demand. It is the first time the model has been used for carbon removal; advance market commitments were previously used to accelerate the development of pneumococcal vaccines for low-income countries.
"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," said Nan Ransohoff, head of climate, at Stripe.
Frontier will enter into low-volume purchase agreements with early-stage carbon-removal suppliers piloting new technologies. For those in the growth stage, Frontier will facilitate offtake agreements between individual buyers and suppliers, promising to purchase future tons of carbon removal if and when they are delivered.
The programme will identify those carbon-removal technologies with the greatest long-term potential, giving them advice and support, and helping them to scale through purchases.
The programme is looking to accelerate technologies that meet a range of criteria that includes the ability to store carbon permanently, could be affordable at scale at under $100 per ton, and has a path to being a meaningful part of the carbon-removal solution portfolio.
"At Alphabet, we know first-hand 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," said Kate Brandt, chief sustainability officer at Google. "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."
Frontier is a wholly owned subsidiary of Stripe and will also be funded by businesses which purchase carbon removal through Stripe Climate.
In August 2019, Stripe announced plans to start purchasing carbon removal, initially committing $1 million. The company launched Stripe Climate to US users in October 2020, with the global beta programme going live the following January and the global programme going live in May 2021. The product allows companies to easily invest in technologies that support climate action, by diverting a fraction of their revenue towards initiatives that permanently remove carbon dioxide from the atmosphere.
Businesses running on Stripe can back projects with a few clicks. Stripe and its users have already committed $15 million to purchasing from 14 carbon-removal start-ups across North America, Europe and the Middle East.