Why Out of the Blue applied for Stripe’s carbon removal purchase.
Out of the Blue is a start-up with the mission to remove CO2 from the ocean in a safe, cost-effective and large-scale manner. Our novel technology consists of filters that capture the CO2 from the seawater, to subsequently store it underground. We are looking to raise funding, but are encountering difficulties in the traditional Venture Capital/start-up model for this type of project. We applied to Stripe’s carbon removal purchase to hopefully overcome some of these issues.
Stripe is a fin-tech (financial technology) company, used by millions of businesses to facilitate online payments. Moreover, the company is very committed to the climate crisis, and helps any business to take climate action through their platform. To facilitate this, and to find carbon removal projects, they have posted an open call for tenders for the second time. Anyone can apply with an offer, that is subsequently being analysed by a jury of prominent experts.
One important differentiator of their approach is that they don’t just look at the price of the carbon offset. They also factor in a couple of other metrics, for instance the permanence of the CO2 removal (how long will the CO2 be stored away, and stay out of the atmosphere), and the scalability of the approach. Whereas a purely price-driven call would favour the cheapest forest protection projects (when something sounds too good to be true…), this unique approach makes it possible for more technologically advanced, but harder to develop technologies to compete. Finally, Stripe open-sources the entire procedure, meaning that both applications and decisions are entering the public domain. Here you can find all of last year’s project applications.
As a starting venture, Out of the Blue is not necessarily the target audience for this call. We are still pre-commercial, technologically and economically unvalidated, carrying a lot of operational risk still. Moreover, as we are in an early stage, we always have to weigh the benefit of making ourselves known, with the cost of giving away too much information. However, we decided to apply with our project anyway — and right away. Although the odds of actually being selected are against us, we use this application to make a couple of statements.
There is a need for more engineered approaches
In last year’s application, of the 24 applicants, 20 proposed a nature-based solution, 3 offered mineralization, and just 1 (Climeworks) boasted an engineered approach. I believe it is very dangerous to rely so heavily on nature-based carbon removal solutions.
In other blog posts I have explained why planting trees, although very necessary and laudable for other reasons, will not be enough to get us out of the climate crisis. There simply is not enough land to plant all the trees, it’s getting harder and harder to grown plants in an increasingly unstable climate, and they don’t always lock away CO2 permanently.
The climate crisis is a human-made industrial problem, it needs a human-made industrial solution.
The fact that the only application with an engineered approach made it through the final selection (despite having one of the highest costs per tonne) makes it clear that the Stripe team understands the importance of engineered approaches in the mix of climate solutions. We are hopeful that Stripe will consider this in the assessment of future applications as well, and will see the value in Out of the Blue’s engineered approach.
The ocean is underexplored in the fight against climate change.
Splitting up the 24 applications differently, we notice that just two ocean-based approaches were presented. One is based on growing seaweed, the other on letting a mineral react with CO2 in the water. Clearly, there is a chasm between the number of proposed ocean-based technologies and the importance of the ocean in fighting the climate crisis.
The oceans are covering 2/3rds of the earth’s surface, absorb 1/3rd of CO2 emissions , contain more CO2 than the atmosphere, store 90% of the excess heat due to climate change, and produce >50% of our oxygen. All the accumulating CO2 is causing the ocean’s water to become more acidic, which is often referred to as “the other CO2 problem”. If we don’t start paying attention to this very soon, it will continue to threaten the already fragile oceanic ecosystems.
Noninvasive and safe ocean-based solutions are absolutely inescapable in the fight against CO2.
In the last purchase, Stripe went into the sea with (pardon the Dutchism, in English, one would less aptly say “got involved with”) 1 of these 2 proposals, which makes me optimistic about the interest in ocean-based approaches. Out of the Blue is checking this important box as well.
Engineered approaches get stuck in a valley of death
If you’re start-up planting trees, Mother Nature did 4 billion years of research & development for you. For a start-up in Enhanced Weathering (letting certain natural minerals bind CO2), the main technology consists of an industrial crusher that turns rocks into sand — it were volcanoes that did the really hard work of making that rock in the first place.
Engineered approaches don’t have it so easy: they have to start from a set of physical and chemical laws and have to turn them into an efficient machine. A lot of time- and money-consuming development is needed, and there are many unknowns and challenges along the way. However, at the end of the road, a well-controlled and highly scalable technology may arise.
On the way there, engineered approaches suffer from a range of chicken-or-egg problems that we’ll have to break FAST.
Whenever I pitch my start-up for funding to build a prototype, investors tell me they want to see a prototype before they can provide funding. The market for voluntary CO2 removal is pretty small, but the supply of credible credits (such as the ones I want to provide) is arguably smaller. Potential clients are hesitant to buy expensive CO2 removal credits, but until enough credits are bought, and enough CO2 is removed, the price won’t come down. And it’s difficult to store 1kg of CO2 somewhere, yet you need to remove 1kg before you can have a supply of 1000s of tonnes that could be stored better.
The good news is: Stripe decided to buy CO2 removal credits from Climeworks in the last round, despite their high cost, indicating that they consider an engineered approach to be an important part of their CO2 removal mix.
More competition is needed among the engineered approaches
The fact that just one company applied with an engineered approach, is not really a coincidence, but it is worrying.
To solve the climate crisis, a synergy of dozens of approaches will be needed, which means that hundreds of technology concepts should now get funded, in order to figure out what works and what doesn’t (again, FAST!)
When looking for innovative technologies, ideas need to go through a funnel in different stages, and for every technology making it into commercialisation, you first need to start with dozens of conceptual ideas.
What does it say about innovation in CO2 removal technologies, when the current pipeline has just 1 engineered venture in the funnel?
As I mentioned, there are many chicken-or-egg problems to overcome. But let’s cut to the chase, the real problem is $€¥£. THE real problem is that to even start a CO2 removal start-up (or any deeptech/hardware venture for that matter), a lot of up-front investment is needed in order to even get started at the very beginning.
As a result, my hunch is that a lot of initiatives can’t get started, while a handful of Direct Air Capture start-ups have accumulated close-to-astronomical funds, oftentimes from high-profile backers. Having this oligopolistic concentration of technology unchecked is not healthy, yet, sadly, not entirely surprising either.
Climeworks, the start-up from whom Stripe bought CO2 removal last year accumulated 180 million dollars from both public funds and private investors over the last years. It is getting harder and harder to even start competing with them, which is widening the gap even further, drastically reducing the innovation potential in the field. It is time to break that dynamic.
It’s important the community knows what is out there
Stripe’s CO2 removal purchase has become a reference in our field. Not only was this initiative a forerunner of a group of companies making net-zero pledges, the rigor and openness of the initiative is truly one-of-a-kind. Experts, researchers, investors investigate these applications very closely.
Out of the Blue wants to show the community it’s there, and it’s ready to play!
There is no time to wait
Finally, and perhaps most importantly, there is no time to lose!
In case you missed it, we are in a climate emergency!
How bad does the climate need to get for real action? If we keep waiting for investors before we have clients, if we keep waiting to show what could be possible before it is fully developed, if we keep from offering a concept before it is cheap enough… eventually, we will lose it all.
Out of the Blue applied. We jumped, and we decided to build the parachute while hurling to the ground. We don’t have a perfect answer to every question in the application form, but neither do the other projects.
The climate clock is ticking ominously. We need to start doing something.