The Economics of Carbon Removal with Nan Ransohoff
Nov 30, 2022
auto_awesome
Nan Ransohoff leads Frontier, Stripe's nearly $1B initiative aiming to catalyze the carbon removal market. In the discussion, she clarifies the crucial difference between carbon offsets and permanent removal. Ransohoff explores the pressing need to balance economic growth with carbon reduction goals. She dives into the role of policies like the Inflation Reduction Act in enhancing carbon capture tech. The conversation highlights innovative carbon removal solutions and the importance of funding and rigorous measurement for success in this emerging industry.
Frontier uses a $1B fund to kickstart the carbon removal market, vetting solutions and aiming for net zero emissions by 2050.
Decarbonization strategies include renewable energy, grid updates, and exploring innovative solutions like synthetic biology and carbon removal technologies.
Frontier’s AMC fund facilitates carbon removal by providing demand signals, addressing financing challenges, and scaling solutions down the cost curve.
Deep dives
Carbon Removal and Market Initiatives
Carbon removal efforts are crucial due to increasing CO2 levels in the atmosphere driven by human activities. Initiatives like Frontier are investing nearly a billion dollars to kickstart this market. The focus is on vetting various solutions and distinguishing between offsets and permanent removal, aiming to reach net zero emissions by 2050.
Decarbonization Challenges and Solutions
The challenge of decarbonization lies in enabling economic growth without harming the environment. Strategies include transitioning to renewable energy sources, updating grid infrastructure, decarbonizing heavy industry, and exploring innovative solutions like synthetic biology and carbon removal technologies.
Role of Frontier in Carbon Removal Solutions
Frontier, through advanced market commitments, aims to buy $925 million worth of carbon removal over nine years to address the growing need for roughly 6 billion tons of CDR by 2050. By fostering a market for carbon removal, Frontier seeks to accelerate the development and adoption of scalable solutions to combat climate change.
Empowering Carbon Removal Solutions by Setting 2030 Trajectory Goals
In the podcast, a discussion revolves around the importance of developing robust measurement and verification methods for carbon removal solutions. The focus is on optimizing efforts to achieve the best possible trajectory for carbon removal by 2030, rather than just targeting specific emission reduction numbers. Success is defined by ensuring demand is not a growth bottleneck for carbon removal companies, fostering a diverse portfolio of scaling companies pursuing promising pathways, and determining the collective scale at which carbon removal pathways can effectively work.
Advanced Market Commitment (AMC) Fund Structure for Carbon Removal Initiatives
The podcast delves into the design of an Advanced Market Commitment (AMC) fund to accelerate carbon removal solutions. Contrary to traditional pharma industry AMCs, adjustments are made to suit the dynamics of carbon removal endeavors. The concept focuses on providing technology-agnostic demand signals, addressing financing challenges for upstart companies through offtake provisions, and facilitating stepping stones for companies to incrementally scale solutions down the cost curve. The tailored AMC approach aims to expedite innovation and address gaps in the evolving carbon removal landscape.
What happens when there’s demand for a solution that doesn’t quite exist yet?
Today, we bring on Nan Ransohoff to talk about this exact problem as it relates to carbon removal, and how Frontier — the initiative out of Stripe that she is leading – is using a nearly $1B advanced market commitment fund to try to jumpstart this market.
If you don’t know what that means, don’t worry – we’ve got you covered.
Throughout the episode, we discuss the multivariate carbon equation and why emission reductions are not enough, the difference between offsets and permanent removal, who’s paying for tons today, what solutions already exist and how Frontier is vetting them, moving down the cost curve, where policy fits in, and ultimately what success might look like in this nascent industry.
This is part 1 of our 3-part series on carbon removal. Look out next week for part 2 and part 3, where we dive into a growing marketplace for carbon and showcase several carbon removal solutions.
Please note that the content here is for informational purposes only; should NOT be taken as legal, business, tax, or investment advice or be used to evaluate any investment or security; and is not directed at any investors or potential investors in any a16z fund. For more details please see a16z.com/disclosures.
Remember Everything You Learn from Podcasts
Save insights instantly, chat with episodes, and build lasting knowledge - all powered by AI.
