Updated at 2:25 p.m. ET on December 1, 2020.
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Stripe is one of those technology companies that control the internet’s plumbing. It makes payments-processing software that hustles money from your debit or credit card to someone else’s bank account. If you’ve ever purchased groceries on Instacart or supported a project on Kickstarter, you’ve used Stripe, even if you didn’t know it.
Owning this particular corner of internet infrastructure is highly lucrative. Stripe is worth $36 billion by one metric, making it among the most valuable U.S. start-ups that have yet to go public. Only a handful of firms, such as SpaceX and Cargill, are more valuable.
Lately Stripe has been helping to build a different kind of plumbing—physical pipes running from the open air to deep underground. In the past year, Stripe has become one of the world’s largest purchasers of carbon-removal credits, devoting $1 million to extracting carbon from the sky. Last month, it began allowing its customers—the businesses that use its payment software—to buy carbon removal as well.
Stripe may now have more knowledge of the carbon-removal market than any other private company. In this era of greenwashing and sustainable everything, its program, called Stripe Climate, is one of the most compelling corporate climate initiatives now running.
The term carbon removal refers to any technology that extracts carbon from the atmosphere and stores it for a long time. Trees, which inhale carbon as part of photosynthesis and lock it into wood, comprise the simplest form of carbon removal. But trees have their downsides: They take up real estate, require decades of care, and, in a disastrous wildfire, can burst into flame—and release their stored carbon back into the sky. Above all, they can store carbon for only a few centuries. To really tackle climate change, we need to ferret carbon out of the atmosphere for 1,000 years or more.
That requires technological carbon removal. Well into the 2010s, technological carbon removal seemed completely conjectural, a nice-to-have but still very notional idea. Removing carbon is inherently difficult, at a physical level, because capturing a molecule of carbon dioxide takes more energy than would be generated by burning that molecule. So capturing all the carbon pollution released since 1850, for instance, would require more energy than all fossil fuels have generated since that year.
Then, in 2018, the United Nations’ Intergovernmental Panel on Climate Change announced that the world might need to remove 1 trillion tons of carbon by the end of the century if it hoped to avoid more than 1.5 degrees Celsius of global warming. It also needed to start soon: By the 2030s, humanity has to begin removing tens of millions of tons of carbon each year.
Suddenly, carbon removal seemed essential. Money surged into the sector; one CEO reported receiving five investment offers in one day. At the same time, a new crop of companies began to experiment with new forms of carbon removal. And other companies already in the sector, such as Climeworks and Carbon Engineering, became better known.
That was roughly when Stripe got involved, too.
Until last year, Stripe followed the standard playbook for a climate-concerned Bay Area start-up. It powered its operations with renewable energy, and it sometimes offset its carbon emissions by paying to trap landfill methane emissions, but it did not study carbon removal, much less purchase it.* But then the company’s executives became intrigued by the idea of zeroing out Stripe’s historic carbon pollution—of removing all the carbon that it had emitted since its establishment, in 2010. They were willing to spend up to $1 million on creating a market for carbon removal.
“We got a positive response from the carbon-removal community, because the field is so starved for capital that a million dollars will raise eyebrows,” Ryan Orbuch, a Stripe product manager who’s been deeply involved with this initiative, told me.**
The problem of carbon removal works on a different scale than Silicon Valley’s usual software-level fare, Nan Ransohoff, who leads Stripe Climate, told me. “This is a hardware problem; it’s an infrastructure problem; it’s a science problem,” she said. “It takes a long time to develop carbon removal. This is not Snapchat.”
Today, Stripe buys removal from four companies: Climeworks, which captures carbon directly from the air and injects it into underground basalt; CarbonCure, which injects carbon into concrete; Project Vesta, which uses a common mineral to convert carbon in the ocean into limestone on the seafloor; and Charm Industrial, which produces an oil from biomass and then injects it deep into the earth.
The company picked these four relatively small companies based in part on their potential to become much larger operations. “As we scale up, we hope to find significantly more,” Orbuch said. The company’s ultimate goal here is to bring the cost of carbon removal down the “learning curve”—which means, in essence, making it cheaper. By buying from these companies now, at a relatively high price point, Stripe is aiming to let everyone pay less later.
“The biggest challenge when you’re trying to bring a new technology to bear on something like carbon removal is: How do you come down the cost curve?” Peter Reinhardt, the chief executive of Charm Industrial, one of Stripe’s carbon-removal clients, told me. Right now it costs $600 to sequester a ton of carbon using Charm’s technique, but it won’t become a competitive product in carbon markets until that cost is down to about $200 a ton. “By the time we deliver on our contracts with Stripe and others, we’ll be down the cost curve by 10 percent,” Reinhardt said.
Stripe’s $1 million is a significant investment, but the company can’t do much on its own. It can do more by bringing in its clients. By offering its customers easy access to buying carbon removal from these same companies, it can help expand the market and therefore bring prices down faster.
“We are trying to be the demand-side signal,” Ransohoff told me.
The project has won support from the carbon-removal sector, in part because the field is so small that Stripe has talked to virtually everyone in it. “I am deeply skeptical of almost all corporate climate action,” Jane Zelikova, the chief scientist at Carbon180, a carbon-removal think tank, told me. (She served as a paid adviser to Stripe Climate last year.) “I think what Stripe did is really different, which is why I was willing to be involved with it … They’re not greenwashing. They’re literally paying whatever the price is to remove carbon from the atmosphere.”
Earlier this year, Zelikova reviewed “nature based” carbon-removal companies that applied to be Stripe’s carbon-removal clients. Even though she described herself as an advocate of nature-based removal efforts, such as improving soil management so as to lock more carbon into the dirt, she ultimately decided that none of the projects was as rigorous or transparent as Stripe required. The company did not buy from any of the companies she reviewed.
One of the most famous debates in climate politics is about the efficacy of individual versus collective action: Should you never fly again, or should society raise the cost of a gallon of gas by, say, 40 cents? I find this debate tiresome. Most people are not going to give up flying, nor should they, necessarily; flying is amazing. Meanwhile the government, at least in the U.S., is not close to imposing a carbon tax.
But the Stripe initiative tries to move beyond that. It says, Okay, given the government’s lack of initiative here, what most demands our attention?
The answer is clearly carbon removal. The earlier that someone makes a large purchase of carbon removal, the faster it will become relatively cheap. So Stripe is deploying a small version of what we would call, in a government setting, a procurement strategy.
It’s a classic way to spur innovation. You can see it in Operation Warp Speed, the American effort to develop and secure COVID-19 vaccines. One of the ways that the government encouraged drug companies to make vaccines quickly was to promise that it would buy the final product.
“When investors go to decide whether they’re going to give any of these companies money, they’re going to ask, Is there a customer?” Ransohoff said. “Right now, in carbon removal, the answer is mostly no.”
So Stripe’s job is to be the buyer of first resort: the “demand-side signal” that a market exists for carbon removal. It is guaranteeing, in some ways, the existence of a future market for direct carbon removal. Now that it allows other businesses to contribute to its climate fund, it is expanding the size of that purchase pool. Stripe currently does not take a cut of other companies’ contributions to its climate fund. But it has a clear information advantage. If this positions Stripe to be the world’s first and best carbon bank—well, that’s just good business.
I find Stripe Climate to be unusually admirable, a pragmatic and imaginative new approach to corporate climate action. It is honest, in a sort of structural way, about what companies, even large ones, can do about climate change. For instance: When other businesses buy carbon removal through Stripe Climate, Stripe won’t tell them exactly how many tons of carbon they’ve offset. The point here isn’t for companies to balance their lifetime carbon debt on some imaginary ledger. The goal is for businesses to do something that benefits the world more broadly, to the extent that they can afford to.
Someone Else’s Weather
The reader N. Wolf-Camplin sent in this picture of fog covering the Intracoastal Waterway in North Carolina, near Masonboro Island.
Every week, I hope to feature a weather photo from a reader or professional in this part of the newsletter, because the climate is someone else’s weather. If you would like to submit one, please email email@example.com.
3 Transforming Things
- Elon Musk is now the second-richest man on Earth, eclipsing Bill Gates. Many climate-tech companies and electric-car makers have outperformed the broader market in the past year, but I’m not sure people understand how much better Tesla has done, even compared with companies like it. As Tesla’s share price has surged this year, Musk’s wealth has quintupled, rising to $127.9 billion.
- President-elect Joe Biden has named John Kerry as his special climate envoy. Kerry, a former secretary of state, will also sit on the White House National Security Council, making him the first member of that group with a full-time climate mandate. It’s still unclear whether Kerry or some other administration official will handle domestic climate policy. At an event today, Kerry announced that rejoining the Paris Agreement—a first-day goal of Biden’s—is “not enough.”
- General Motors has switched sides in the fight over electric cars. As of last week, the automaker was part of the Trump administration’s lawsuit against California, arguing that the Golden State had no authority under the Clean Air Act to mandate carbon-pollution rules on its own. But this week—et voilà!—GM announced that, in fact, California did have that authority, and furthermore, that GM would enthusiastically support Joe Biden’s plan to accelerate the transition to electric cars.
I wonder what changed the company’s mind? Maybe it decided its earlier good-faith interpretation of the Clean Air Act was in error.
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*This article previously misstated that Stripe had sometimes paid to plant trees as carbon offsets before 2019. In fact, Stripe's initial carbon offsets focused on landfill methane projects.
**This article previously misidentified Ryan Orbuch as a project manager at Stripe. In fact, he is a product manager.