Alphabet, H&M and others pay $4.5 million for carbon removal ‘prepurchases’

Alphabet, H&M Group, Match, Shopify and Stripe are paying $4.5 million to nine early-stage carbon removal startups to help them scale pilot and demonstration projects for their technologies. For five of the nine companies, this funding represents an initial corporate transaction.

Each startup will receive upfront payments of $500,000. If they reach certain milestones, they’ll be considered for commercial contracts with Frontier, the corporate buyers group co-founded by Alphabet, McKinsey, Meta, Shopify and Stripe, said Joanna Klitzke, procurement and ecosystem strategy lead at Frontier. “There is no clawback if companies don’t deliver,” said Klitzke.

Frontier’s funding helps startups transition from research and development into commercial production more quickly, while helping corporate buyers assess the potential risks associated with emerging technologies. “It can help signals to other companies that we’ve cleared this hurdle,” said Luk Shors, co-founder and president of Capture6, one of the selected startups, which is developing an electrochemical system that captures carbon dioxide from industrial waste streams.

The contracts are different for each startup, but among factors the corporate buyers will study:

• The energy required for operations and whether it can be delivered by renewable power. For example, the process used by one startup, Planeteers, relies on water flowing away from water treatment plants and doesn’t need extra infrastructure.
• How existing industrial processes might be harnessed for carbon removal. For example, one of the nine to receive funding is Exterra. It mineralizes mining waste, which cleans up mining sites during extraction. Another company, Silica, works in collaboration with sugar cane farms. 
• Whether there are “co-products” created during removal that could generate another revenue stream. Another startup, Alithic, produces a byproduct that can be sold for use in concrete, lowering its costs.  

This is the fourth cohort of entrepreneurs to receive money under Frontier’s “prepurchase” track. At least two companies from its 2023 round of prepurchases have since signed sizeable, formal offtake contracts to deliver carbon removal credits: 

• Vaulted Deep, which removes carbon dioxide in the form of carbon-rich slurry injected underground, won a $58.3 million contract with Frontier less than a year after the prepurchase.
• Holocene, a direct air capture company, on Sept. 10 signed a $10 million bilateral agreement with Google, which will pay $100 per ton for the credits if things work out.

There were 163 applicants for this funding round, and the decisions were made by 40 external experts as well as the internal team at Stripe that manages the Frontier program.

The other selected startups are:

• Alt Carbon, which spreads basalt on Indian tea plantations to improve soil health
• Anvil, which uses rock minerals to turn atmospheric CO₂ into carbonate 
• Flux, a startup using basalt to speed soil carbon capture in Sub-Saharan Africa
• Nulife, which turns wet waste biomass into bio-oil that’s injected underground

Frontier has pledged to spend $1 billion on carbon removal contracts between 2022 and 2030. So far, the group has signed almost $320 million in contracts, representing approximately 572,000 metric tons of carbon removal.