🐝 Can Planting a Trillion New Trees Save the World?
(064) & Other Stories in Carbon Sequestration This Week
Good Morning
What we’re reading this week:
Can Planting a Trillion New Trees Save the World? (NYT)
Polestar CEO sees value in EVs, even when they’re parked (TC)
Will You Protect the Trees or the Forest? (SP), written by our friend and reader Allegra Reister)
Also, Zitara raised a Series A - congrats to our dear friend and reader Nikolai Christoffersen, who works there as Chief of Staff!
The Greendicator
Top Deals of the Week
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Fervo Energy, a startup building geothermal power plants, raised a $138M round led by DCVC (BW)
US EV-focused startup Atom Power received a $100M investment from Korea's SK Group (RT)
Carbon Direct, a science-first carbon management firm and software provider, raised a $60M funding round led by Decarbonization Partners (BW)
Zitara, a three-year-old startup based in Oakland, Ca., that builds cloud and embedded software to optimize battery management, raised a $12 million Series A round led by Energy Impact Partners (BW)
Worldfavor, a twelve-year-old Stockholm startup that helps clients comply with ESG requirements in their supply chains, raised a $10.1 million Series A funding led by SEB Private Equity (TC)
CurbWaste, a SaaS solution for waste service companies, raised a $6M seed round led by B Capital (BW)
The Good Face Project, a four-year-old startup based in San Diego whose mission is to provide chemical product innovators with real-time scientific data so that they can create formulas that deliver performance while safeguarding human health and the environment, raised a $5.7 million seed round. The deal lead was VMG Catalyst (TF)
Koolboks, a sustainable refrigerator company, raised a $2.5M seed round led by Aruwa Capital Management (TC)
Mantel, a Boston startup founded this year that uses molten salts to selectively absorb CO2 and regenerate a pure stream of CO2 that can be either stored or utilized, raised a $2 million round led by The Engine (REW)
Green Theory
Growing Carbon Bubble?
At the heels of the Inflation Reduction Act’s announcement, India’s government unveiled a monumental bill of its own. Notably, the country will ban the export of carbon offset credits, until national climate goals are met. The new US law outlays significant funding for carbon capture (CC) credits across various applications, and India’s move could signal a rejection of the climate colonization that troubles the industry. Notably, the emissions reductions credited to the Inflation Reduction Act (IRA) draw largely from forecasted growth in captured carbon (roughly 30% by 2035). Whether technology can achieve these ambitious leaps forward remains to be seen, but we can still analyze the market for different forms of CC today. Given the shaky implications of carbon capture, will the IRA’s changes to this nascent industry impel or imperil broader climate goals?
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The new law funds carbon credits across three applications: industrial, fuels, and direct-air capture (DAC). The Advanced Industrial Facilities Deployment Program tops out around $6B, split across credits for these three. Industrial facilities and power plants capturing and storing carbon will earn 30% more per ton, and “fuels”—captured carbon released for extracting more oil from the earth, or other re-releasing purposes—will earn over 70% more per ton, in addition to profits from selling or using fuels. Most carbon captured is used for this latter purpose: enhanced oil extraction, lowering the cost of fossil fuels and accelerating emissions. Finally, DAC, which sucks carbon directly out of the air, will see a jump in compensation from $50 to $180: more than tripling.
![Points scored](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fbucketeer-e05bbc84-baa3-437e-9518-adb32be77984.s3.amazonaws.com%2Fpublic%2Fimages%2Fb9ea7188-328a-4dcc-9f9a-4bdd90c24398_1200x742.png)
How do these prices stack up to the costs? Industrial capture finds a break-even cost at around $80, though some applications become cost-effective below $50. Raising the price, the government will enable more operations to switch to capture methods without harming their margins. The fuel applications earn capturers further profit, as their harvested carbon or other gas is then sold and emitted anyway. Rewarding this application with a 70% pay bump enables oil and gas companies to more affordably invest in net new fossil fuel infrastructure, despite warnings from international energy economists and industry leaders that new fossil fuel infrastructure is neither needed, nor desired, on path to a net-zero 2050. While industrial and fuel capture are set for booms, the economics for DAC still don’t pencil out. With cost estimates above $300 per ton today, $180 won’t help firms break even. Prices set to rise, climate modelers have already forecasted national impacts.
Opening the door for a mix of more fossil fuel and carbon capture facilities, the IRA’s impact modeling projects a frightening level of just what we ought to avoid: more oil, gas, and coal (A). The $6B IRA provision that may go toward carbon capture credits today is forecast to grow investment in the industry to the tune of $20B per year by 2030. To put those figures into perspective, the global carbon capture market sits below $4B annually today.
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The forecasted emission (C) reductions lay suspiciously linked to new fossil fuel infrastructure (A), and an unproven scale of carbon capture (B). Achieving 450 Mt of carbon capture capacity per year would come on the back of new fossil fuel infrastructure, and further entrench oil and gas in the fabric of society.
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The entire IRA is estimated to offset ~1 Gt of emissions by 2030 (C), with the share of carbon capture growing from 20% of reductions by then, to almost one third in 2035 (B).
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Spending billions on fossil fuel infrastructure, with or without carbon capture, will require burning the limited fuels that propel the climate crisis. Though higher rewards for industry storing carbon in geologic formations limits the carbon these facilities emit, it also makes the shortcut bandaid of decarbonizing downstream even more accessible than the challenging, necessary work of finding cleaner ways to power processes from the start. Even worse, the energy spent capturing carbon for re-use is helping to further drive down costs for fossil fuels, and speed up emissions growth. One challenge with carbon credits—they operate as permission to emit. Therefore, these industrial and fuel-based capture credits only reduce emissions in equal or lesser proportion to emissions created.
The same issue of enabling emissions plagues agricultural carbon storage credits and direct-air capture credits alike, but promoters still champion the techniques’ and technologies’ potentials. Around the scale of the global industrial CC market, the US agricultural carbon credit market sits around $5B today. Unfortunately, agricultural credits aren’t a trustworthy carbon sink, as carbon market experts explain. On the bright side, however, the IRA will invest roughly $10B in grants to restorative, carbon-sensitive farming, as opposed to agricultural credits. Last and least, direct-air capture’s unprofitable price point keeps forecasts of impacts for this expensive technology grounded. The International Energy Agency projects DAC reaching 1 Mt of annual offset capacity by 2025, so it stands to reason why Princeton excluded a rapid growth in DAC from their CC forecast scenarios–it’s not even visible on their chart (B). Lacking cost-effective methods for extracting carbon from the skies today, with no path to scale, DAC finds little space in capture capacity modeling for the next decade or more, even from those bullish on a carbon capture revolution.
In the end, most praise a multi-pronged approach, pursuing a myriad of options for reducing emissions. When it comes to carbon capture, some of these methods actually remove carbon, others marginally increase emissions, and others yet re-release all of the carbon, or worse. Industrial facilities generating and capturing their own emissions expands fossil fuel use, and the net impact on emissions varies wildly. Agricultural credits have yet to deliver on consistency in duration or capacity, as well as whether they truly represent additional carbon reductions or not. Grants to support climate-positive practices, on the other hand, come as welcome, but don’t grab headlines. At the opposite end of the news cycle, direct-air capture receives much more attention than its place on the 10-year carbon capture roadmap would imply. As appealing as options for carbon removal may be, credits—as a mechanism—cannot escape their bond to excused emissions. Rather than inspire excitement at the messy accounting of carbon capture credits, the IRA highlights the simplicity and satisfaction of just electrifying everything, instead.
The Closer
France's river Loire sets new lows as drought dries up its tributaries (RT)