The carbon removal market could reach $400 billion to $1.6 trillion by 2050, according to McKinsey. But it’s got a long way to go. Right now the market is wild, unexplored territory filled with unproven technologies, murky cost curves, and a motley mix of price points and standards. The hope is that one day it becomes a standardized commodity market of high-quality, durable removals.
But for now, brave buyers have to wade into the wilds and see what works. So what does that look like – and what have they learned so far?
In this episode, Shayle talks to Stacy Kauk, head of sustainability at Shopify, which paid $55 million for 85,000 tons of removal in 2023. Kauk says that very few of those credits have been delivered yet, but the company, along with a few other early entrants like Stripe, H&M, and Microsoft, are investing in a varied field of technologies to develop the market.
Stacy thinks of Shopify’s approach like a venture capitalist’s portfolio, with some companies succeeding and others failing. Stacy and Shayle walk through the practical realities of building that portfolio, covering topics like:
- Using forward purchases, flexible contracts, and Shopify’s internal credit standards
- The challenges that slow down ambitious startups, like permitting delays and the complicated work of measuring, reporting, and verifying credits
- Which technologies are hot and which are not, ranging from biomass burial and wastewater treatment to enhanced weathering and ocean alkalinity enhancement
- Comparing the lower energy requirements of enhancing natural systems with the potentially clearer cost curves of engineered systems
- Building a diverse portfolio across technologies and maturities
- What determines the prices Shopify pays for different credits
Recommended Resources:
Bloomberg: Stripe, Alphabet and Others to Spend Nearly $1 Billion on Carbon Removal
Carbon Dioxide Removal Primer
Latitude: Fixing the messy voluntary carbon markets
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Catalyst with Shayle Kann