A

This episode of ShiftKey is brought to you by Heatmap Pro. You already rely on Heatmap for daily reporting and commentary on the energy transition. That's why you listen to this show. Well, Heat Map Pro brings all of our research, reporting and insights down to the local level. It's a software platform that tracks all local opposition to clean energy projects and data centers. It forecasts community sentiment and it guides data driven engagement campaigns. Go to heatmap News Pro to book a demo and see the premier intelligence platform for project permitting and community engagement. That's heatmap News Pro. Hello. It is Wednesday, June 17, and one of the most interesting experiments in carbon removal announced a big new project this morning. Frontier is a coalition of tech, finance and fashion companies that provides what's called an Advanced Market Commitment, or amc, for carbon removal. It is a very interesting format. It commits to buy carbon removal credits from companies that are still building out their infrastructure, working on their technology in order to make sure that carbon removal will exist in the future. It's like a private version of Operation Warp Speed just for carbon removal. Its members include a lot of firms you've heard of Stripe, Google, McKinsey, HM, JPMorgan Chase, Salesforce, and others. Well, as of this morning, Frontier has raised a new round of more than $900 million to go into the market and keep supporting carbon removal. That effectively doubles the amount of money it has on hand. It calls this new round a Growth Advanced Market Commitment or Growth amc, a bit of an invented term, but but it says it will focus its next stage of buying on just a handful of companies who it thinks have the potential to remove billions of tons of carbon from the atmosphere. And there's other news too. The AI lab Anthropic, who we haven't seen a lot of climate commitments from, has now joined Frontier as well, joining Google and Shopify and all those other firms I just listed. Now, Frontier, some of you may remember, launched back in 2022. I wrote about them at the time for the Atlantic. At the time, there weren't a lot of sources of demand for carbon removal. And so when they committed about a billion dollars to do it, it was a big deal. They've since used that money to buy just under 2 million tons of carbon removal credits. Since then, as we've also covered at Heat Map, a whale in the market has come and gone. I reported earlier this year that Microsoft, which is the world's largest historic buyer of carbon removal, they bought about 70 million tons of it paused its purchases, which is a big deal for the industry. It cuts off the primary source of demand, the primary customer for future carbon removal. So Frontier re upping at this moment is a really big deal. To discuss that news and more, I'm excited to welcome the head of Frontier, Hannah Bevington Vallori. She was on Frontier's founding team and joins us from the United Kingdom. We talk about this announcement, the future of carbon removal technology and how to interpret Anthropic's membership in the coalition. Always a company people want to hear about. I'm Robinson Meyer, the founding executive editor of Heat Map News and it's all coming up on Shift Key. Hannah Bevington Vallori, welcome to Shift Key.

B

Thanks for having me.

A

So today this morning Frontier announced a new $900 million raise. Can you just start off by telling us what you're going to do with it?

B

Yeah. So today we launched what we're calling the Frontier Growth AMC, which is an additional $900 million committed to by carbon removal between now and 2040. So the buyers in this AMC are Stripe, Google, Shopify, Salesforce, H and M and Anthropic. And this funding takes US to about 1.8 billion total committed across both of our AMCs. And I think what is important to note about this is really the question on everyone's mind in carbon removal today is is demand going to keep pace with the technology development? And even more than that, is demand going to scale to what the market needs to stabilize global temperatures or sort of gigaton scale, hundreds of billions of dollars a year. So this growth AMC is really designed to in part answer that question and bring corporate buyers to market to keep buying carbon removal at scale and at pace. We're going to, on the supply side, focus on a narrower set of portfolio companies, those who are highest potential, most promising and sort of ideally get them to commercial scale and then perhaps even more unique is really on the demand side. We're thinking about prioritizing projects that have line of sight to robust long term government driven demand. So thinking about how do we as corporate buyers use what is still sort of a relatively small amount of money to really catalyze this space and pull forward that policy that is required to get the market to gigaton scale.

A

It sounds like as you go through these projects and technologies that you have some candidates already in mind. Are like the companies that will benefit from this purchase already kind of lined up and in the system or is this still open to other carbon removal companies?

B

The short answer to that is we're still totally open and what we want to do is spend this money most effectively. So on the best ideas, on the best projects, on the best teams. I think though the Frontier team has diligenced over 500 carbon removal companies. We have a portfolio of 60 companies today. And so we do know this space relatively well. As we think about the deployment strategy for this growth amc it's really going to be likely a combination of really high performing existing portfolio companies and new companies, larger, longer bets and sort of across a diversity of pathways. And I should perhaps say that 900 million is at once a small and large number. So yes, it is both a great step forward, meaningful for the carbon removal market, especially in this moment. And there will likely be projects that we cannot buy from who are also great and very high potential. So over the next couple of years,

A

can you give us a sense of the technology landscape as you see it at the moment? Because I think one thing that's notable about this announcement is that you kind of go through the technologies that you think are going to be able to deliver gigaton scale. And I do think this is something that's changed from like the beginning of Frontier, it was more of a wide open space. Like it seems like you have narrowed in on some of the technological options that will actually be able to remove carbon on the scale that will be necessary to actually meet our alleged global temperature targets. What are those technological options as you see them?

B

I mean, I think what has been really remarkable is the pace of technology development and carbon removal. So when we launched frontier back in 2022, fewer than 10,000 tons of permanent carbon removal had been done to date. Most of carbon removal was really like an idea in someone's head or in an academic paper. And we now have hundreds of companies building. We have real world data across most major pathways. And so yeah, we are so much more opinionated today. We have so much more information about what that gigaton scale portfolio will look like. And at the same time there are still so, so many questions about realistically how big and how cheap can these technologies get. But sort of with those caveats, we think of this market as having about five pathways that are on a spectrum. And the spectrum being of sort of how relatively well understood and sort of well bounded is this. And when I say relatively everything in carbon removal is still pretty nascent compared to some other climate tech industries, but sort of within carbon removal. So on the one hand we have things like biomass based approaches or often abbreviated to something like bikers, so BECs and other biomass based technologies. You know, these are technologies that Today are delivering tens of thousands of tons of removal. They're relatively well understood. We have facilities that are building capacity on the hundreds of thousands of tons. They enjoy a lot of existing policy support. We have many different biomass based approaches in our portfolio. Vaulted, Charm, Exergy, Half sun, Celsio.

A

This kind of ranges from like burning biomass, capturing the carbon, injecting the carbon below the ground, to the charm approach where you create this bio oil from biological material that's photosynthesized and then you would just inject that deep below the ground. Lots of injection of biomaterial. But like it's kind of ranges from traditional bioenergy to more experimental like charm

B

Bioenergy with carbon capture obviously generating a stream of CO2 and then other biomass approaches, Charm and vaulted, injecting some form of either bio oil or biomass slurry. This pathway is constrained by the amount of sustainable waste biomass that the world has and can aggregate and access in an economical way. And so we think, while very compelling, so likely to be cheap, likely to have a lot of political support, is going to deliver part of our gigaton scale portfolio. And sort of on this end of the spectrum I would also put enhanced rock weathering and direct air capture technologies that are relatively well understood being deployed in the field, but are capped in some way. Enhanced rock weathering relatively capped in scale at the single digit gigatons. Direct air capture likely capped by its total potential cost. So all three potential to be part of the gigaton portfolio, but not a winner takes all technology. On the other hand of the spectrum, we have things like surficial mineralization, ocean alkalinity enhancement. These are technologies that we are super bullish about, have enormous potential, enormous scale potential could deliver more than 10 gigatons a year at relatively affordable prices, less than $100 a ton, but have relatively less real world data. So these are still more in the conceptual phases. And a lot of the work that we are doing at Frontier is how do we get more startups working on these ideas, testing and refining these ideas in the field so that we can better understand what the true potential is here. So surficial mineralization, taking reactive rock either from waste rock piles at mines or mining it, where you find a deposit, exposing that to air, likely piling it on a heap leach pad. This is something that we think very, very high potential. And yet we don't know enough yet.

A

It seems like Frontier is approaching this round a little differently than the first round. I mean, I think when Frontier launched it was like a classic advanced market commitment. I Think the term I used in. I was working at the Atlantic at the time, but it was like buyer of first resort. You were going out into the market, you were supporting a lot of being the first customer for a lot of interesting technologies. What's interesting over those intervening years is that Frontier has been in the market for a long time. I think you guys have bought 1.8 million tons, maybe around there. Since 2022, an enormous buyer entered the market in the form of Microsoft. It bought 70 million tons, give or take, like 5 million on each side. And now it, as we recently reported here at Heat Map, it has paused its buying for the moment. And so it kind of was this enormous anchor buyer in the market, but now it's gone. And so it's a market that's gone through a lot of convulsions. There's a lot of good companies sitting out there that maybe were planning on a customer that has gone away. How is that shaping this round and how are you thinking about Frontier's role given that kind of. In some ways we're in this weird moment where it's like we don't need an advanced market commitment anymore. The market existed, but then the market kind of went away. And so how are you thinking about structuring frontiers market activity to support demand through the next several years?

B

Yeah, I think we think a lot about what is the role of the corporate buyer in carbon removal, Especially the corporate buyer sort of at the Frontier scale. So buying millions of tons of removal today. And really the way that we answer that question is we think, okay, where does the carbon removal market need to be or what is the end goal for carbon removal and how do we get there and what needs to happen next to be on the right trajectory to scale? So when we think of carbon removal at gigaton scale, we are really looking at hundreds of billions of dollars of annual procurement spend. And that scale of market is unlikely to be delivered by the voluntary carbon market. That has actually always been true. The voluntary carbon market is sort of unlikely to get to that point. And so then you imagine that this market at gigaton scale is going to have to be government driven. Now, government driven can take a lot of different flavors and form factors. So it doesn't necessarily mean government pays. What it means is, and this is

A

true of all waste markets. I mean, if you think of carbon removal as a type of waste market, what happens is the government, I mean, we as taxpayers or the public in some kind of broad sense, pays to remove the waste. But like the government comes and Picks up our trash, for instance, the government does removes waste from the water. You know, like if you think about this as a form of waste management, then it would be very natural for the government to take it over. Of course it is different from other forms of waste management, let's say, in that it's maybe thermodynamic. Thermodynamically and scientifically a little more ambitious than trash pickup. Exactly.

B

Yeah. There's a stat actually that we love that the world spends $1.4 trillion on waste management. And so as we think about hundreds of billions spent on carbon removal, it's not unprecedented, it's large, but we can see a path. And so if we're moving to government driven demand, what that looks like to us is sort of likely one of three things. One is we have compliance markets or emissions trading schemes of some form. So really corporates are paying for carbon removal to neutralize their residual emissions, but they are mandated to do so. We can write carbon removal into existing industrial regs. So for example, we could mandate that wastewater treatment plants use limestone to manage their ph, which actually might be better and easier and cheaper than existing chemicals that are used today. Or you could imagine direct funding of removal activity and that could be direct procurement, direct buying of tons, and it could be things like tax credits and subsidies and so on. But the government can't use taxpayer dollars to pay for stuff that is unproven or very risky. And similarly, it can't mandate the use of technology that's super expensive. And so before we get to that government driven future, we really need to de risk the technology. We need to pull it to commercial scale, and we need to make sure that it's affordable and predictable and reliable. And that is the role of corporate buyers. So this is a long winded way of answering your question, but really we think of this growth AMC as saying, okay, what can we as corporate buy do to pull that future into being? So to ensure that we are de risking the most promising technologies, we are helping those technologies go to scale. And we are actively partnering with governments around the world to make sure that we are setting up this baton pass or even a public private partnership whereby there is sustained and robust long term demand for these projects once our offtake agreements expire.

A

And so what does that mean from a project buyer standpoint? How, how does that actually change how you'll relate to companies or work with companies during this new phase?

B

Yeah, there's a few different ways that this can look like. In short, it looks like we're Prioritizing projects that have line of sight to government driven demand or who we think that in buying from that project, we make it more likely that a jurisdiction gets excited about policy and carbon removal. So to give you a couple of examples, a great example of a project we've already done where we would love to do more like this is like the Stockholm Exergy facilities. Stockholm Exergy has a bioenergy facility in downtown Stockholm. It delivers most of the district heat to the city. They are installing a carbon capture retrofit to capture the carbon emissions off of that facility and injecting in the North Sea. Frontier and Microsoft were some of the original off takers of this project. And in being an off taker, we also allowed Exergy to qualify and then to win an award from the Swedish State Aid auction which is filling out the rest of their offtake stack and sort of ensuring that this project is viable and can get built. A perfect example of a public private partnership making a carbon removal project happen and paving the way for more of those types of projects to get built in places like Sweden and around that area. If we could find more projects like that. So more projects where we either have a direct link to policy, where we can buy from a project, get that project FID and in doing so get the local jurisdiction really excited about bringing more of that economic activity to their jurisdiction. Those are the types of things that we really want to see.

A

Does that mean basically not prioritizing projects in the United States? Because the US is not a primary supporter of carbon removal technology at the moment?

B

This is everyone's favorite question. In short, no, I think so. A There are existing carbon removal policies that persist Today in the U.S. carbon removal has fortunately enjoyed quite a bit of bipartisan support. So things like 45Q is another great example of government driven demand. 45Q pays for the injection of CO2 underground. So already not disqualifying. And I think for sure if we could imagine a world of either expanding 45Q or having a more tech neutral tax credit, which has been considered in the past, that is like the type of direction of travel we would love to see for U.S. policy. And then, and I think more broadly, if you work in carbon removal, you are like inherently an optimistic and long term thinking person, otherwise you would go crazy. And I think we really believe that sort of in the long arc of the future the US will be a meaningful player in building a carbon removal market.

A

I hope so too. And so one of the other big pieces of news that came out of this round is that Anthropic is joining Frontier. It's quite interesting because I think this is really the first big climate program that Anthropic has joined. Unlike say Apple or Microsoft, they don't have really notable public corporate climate commitments. Can you give us any detail about the size of their contribution to Frontier or kind of what they mean as a coalition member?

B

Yeah, I mean we're just thrilled to have Anthropic in the group. It represents a couple of different things to us. So we. One is carbon removal is a really important part of any corporate climate program. And really like any national climate program, the reason why we care about carbon removal is because IPCC experts talk about how the world is going to stabilize global temperatures and the need to both radically reduce the emissions we emit and proactively scale a portfolio of permanent carbon removal technologies because otherwise we're not going to get to zero without both of those efforts. And so to us, someone like Anthropic signing up to Frontier is indicative of how organizations are thinking about building their overall climate programs, which is that carbon removal should be a pillar of the work that you do. I also think part of this and part of what is true of anyone who joins Frontier is like a love of sort of lowercase f frontier technology and an optimism about the way that technology can help advance the world. And folks who join Frontier and who buy from these really nascent emerging technology companies are really making a bet on human ingenuity and our ability to sort of create the world that we want to see in the future. And so we're stoked, we're stoked to have Anthropic on board.

A

But you can't give us dollar amount,

B

I can't give you dollar amounts. And actually we as a rule don't give anyone's dollar amount. So this is not specific to Anthropic, but yeah, we keep a kosher with a top line number.

A

Well, can I just push a little further and say I do think there are people who are going to see Anthropic join and say Anthropic complicated company because on the one hand I think it's been the most, if there's any company I think that's kind of pledged most among the Frontier AI labs to uphold, let's say liberal democratic values. I think Anthropic obviously has to be top of the list. At the same time they've partnered with xai. They seem to be using a lot of compute at this Colossus data center which is like particularly carbon intensive in Tennessee. I think there are people who say carbon removal is kind of a delayous technology. It allows companies to keep emitting fossil fuels, to keep burning carbon and kind of promising to clean it up later, but not doing anything to reduce emissions in the near term. And anthropic would be a great, maybe example of this. What would be your response to that?

B

Well, I think my response to that would be a couple of things. One is the moral hazard around carbon removal has really not come to fruition. This concept that companies buy carbon removal as kind of a way to get out of corporate climate commitments or other climate activity is like, really not borne out in the data for a couple of reasons. One, the people who care about carbon removal are the people who care about the climate. And so those folks are often building broader programs that include carbon removal and other things. Two, these are all voluntary activities today, and I think they're very, very expensive ones at that. So buying carbon removal today costs hundreds of dollars a ton. Like it is not if you wanted a sort of get out of jail free card. Frontier. And carbon removal is not bad. There are many other ways to have a climate program or maybe have a broader sort of civic responsibility program that are much cheaper than what we do. And I think this is borne out sort of generally in the data, like how much money we spend on carbon removal versus how much money we spend on decarbonization efforts, rightly so, is a fraction. And so the world as it stands is not replacing carbon removal with other decarbonization activities. Rather, buying carbon removal today is recognizing that this market will not turn on like a light switch in 2050 when we want it, if we don't invest today. And so folks who buy carbon removal now are really sort of playing that long game, thinking into the future about what we want to exist and investing today to make that happen. And then, you know, the other way to answer this question is like, we should hold folks feet to the fire on this. So people who buy carbon removal, honestly, people who don't buy carbon removal should be thinking about decarbonizing their emissions.

A

Where is OpenAI? They should totally Frontier.

B

Totally. You can call them and tell them that we should be banging on the doors of these companies and many other companies to be asking them, what are you doing to decarbonize? And that is not just anthropic, that is everyone.

A

You have this particular perch at Frontier into carbon removal. And as we've kind of been dancing about in this conversation, it's been a tough year for carbon removal. I think the removal of Microsoft as a major corporate buyer is really devastating for some companies and it's, we were already expecting I think some kind of retraction or carbon removal recession to some degree. Climate tech's been in a broader recession I think for the past two years and but this is really going to deepen and continue it for carbon removal. But you have a particular view of the industry at Frontier because lots of people come to you for money and they are pretty open book when they come to you for money and you learn a lot about their projects. So what do you see in carbon removal that you feel like people haven't realized yet or that nobody else sees about the industry? Like when you see other discussions of carbon removal, what do you think people are missing at the moment?

B

So it's true that the demand question keeps me up at night. It's why we set out to raise this growth AMC was to make sure that we are doing all that we can to put this market on track to scale. So I do not like, I do think that is a headline that you mentioned and it is a headline that is so real and so I don't, I, I don't want anything I'm about to say to sort of contradict that. I think the thing that people miss or perhaps undersell or under celebrate is the technology progress is insane. That we have gone from a space that really had a handful of companies, no deliveries, no third party registry, no protocols, very little demand side legislation in basically only one country to so much more than that. So you know, we have tens of thousands of tons being delivered, we have large scale facilities being built, we've like crossed approaches off the list which in and of itself is amazing and such a what an efficient way to spend money is in a very short period of time to be able to say there are a few things that we, we don't want to concentrate our efforts on anymore and start to narrow our focus. I think the 2000 and 20s are really about technology development and shaking the trees to say if we're going to get to gigaton scale by 2050 we need to as quickly as possible learn what works and what doesn't work and double down and make those decisions quickly and decisively. And I think we under celebrate how far we've come along that journey in a relatively short period of time. Honestly with a relatively small amount of money, especially for some of the projects that don't have a Microsoft offtake, we're looking at quite an efficient use of capital.

A

Well can you give an example of how the technology has come along in a way that people may not understand.

B

Yeah, so when we did, Frontier Buyers were the first buyers to do a commercial scale purchase of enhanced rock weathering. And our first deal was Lithos. It was our biggest offtake agreement at the time, 60 million. When we did that deal, there was no protocol to measure the amount of weathering that was happening and the amount of carbon removal that was being generated by the practice. And so when we did that deal, it was like a big risk to write an offtake agreement with a fixed price and a fixed volume and a fixed delivery schedule for something that didn't have a well studied weathering curve and didn't have a protocol for measurement. Today we have multiple enhanced rock weathering companies who are delivering on isometric on a third party registry with an approved protocol. We have a much more robust data set for what those weathering curves look like. We have a much greater understanding of what the uncertainties are in the carbon removal drawdown process and how to quantify the enhanced rock weathering. And I think we're getting on the order of tens of thousands of tons delivered this year from those contracts. And so it's an example of a field that was really like an idea in 2022 and is now reaching a commercial scale technology that's like a five year lifetime.

A

We previously touched on this, but of course at the moment, the US has been trying to spin up a carbon removal purchasing program for a little while. Congress has authorized it. The Trump administration has seemingly sat on it at the Energy Department. We do have a tax credit for called 45Q that that subsidizes the direct air capture of carbon dioxide from the atmosphere and its injection underground. But it doesn't subsidize any other form of carbon removal. So it doesn't, for instance, help enhanced rock weathering or ocean alkalinity enhancement or any other alternative form of carbon removal technology. But look, there's midterms later this year, there's presidential election in two years. Money is, I think, going to be a little bit harder to come by than it was in 2021 during the first year of the Biden administration. Is there a policy that you think would be most important for the US to adopt to support carbon removal technology going forward? Like, what's number one on your wish list?

B

Well, number one is actually a policy that has already been proposed and sort of since been shelved. But I believe it was Senator Bennett and Senator Murkowski put up a tech neutral tax credit. So basically Taking the concept of 45Q, paying some portion of the costs of carbon REM from one technology and expanding that to cover a much, much wider swath of technologies, something like that which has already been conceived of and sort of rolled around in the administration would be amazing for guaranteeing a price for carbon removal in the US and for doing that across a variety of technologies. And the other benefit of guaranteeing a floor price here is that you can really incentivize many different technologies to start to race to that price. What you can do then is you can sort of build a competition or sort of an arena of innovation, right, where folks are really saying we want to get down to this price, both so that we can be competitive in the market, but also, you know, perhaps so that we can winner takes all in the US if you will. It's not the only policy that would work in the US And I think one thing that's really important to stress about carbon removal policy is I think some people get fixated on certain ideas. A carbon tax, a compliance market, contracts for difference, an auction, a tax credit, capex subsidies. Honestly, all of it is great. All of it works. And we're probably going to see different form factors in different jurisdictions, kind of based on like what the ideological preference is in those countries.

A

Fantastic. Well, I think there's so much more to talk about, but we're going to have to leave it there. Hannah Bebbington Vallori, thanks so much for joining us on Shift.

B

Yeah, thanks for having me.

A

And that will do it for this episode and this week of Shift Key. We'll be back next week with at least one new episode. We have a run of amazing guests coming up. I have to say, before you go, though, I just want to say I don't know if you subscribe to heatmap Daily, which is heatmap's afternoon newsletter. It comes out every weekday, but if you don't, you really, really should. I I have taken over writing that newsletter. It's really just me. I write it every afternoon and it's a place where I can share my analysis or observation or thoughts or reporting on the energy and climate and decarbonization news of the day. I'm having a lot of fun writing it, honestly, a lot more fun than I thought I would. It's become just a really cool space. And if you don't follow it, I really recommend you should, because if you listen to this show and you've made it this far in the the podcast, you should be following this newsletter. You should subscribe, so we'll stick a link in the Show Notes. You can find the link really easily too if you just go to heatmap News. But we'll take a look in the Show Notes. Subscribe. Just go do it now. You'll enjoy the newsletter. You'll have fun. It's free. I write it. That should be self recommending if you've made it this far in the podcast. And thank you for doing that. Shift Key is a production of heatmap News. Our editors are Jillian Goodman and Nicola. Multimedia editing and audio engineering is by Jacob Lambert and by Nick Woodbury. Our music is by Adam Kramolow. Thanks so much for listening. Enjoy the long weekend if you're here in the us and see you next week.