South Pole, a Swiss carbon project developer, earned a Unicorn status while partnering with Swisscom.

Unicorn is a term used to refer to startup companies with a value of over $1 billion without going public. Any startup dreams to reach this valuation status and South Pole recently got it.

Carbon offset prices have increased by over 400% in the past year. This boosted the valuation of firms in the space while enticing lots of investments.

Swisscom’s minority investment in South Pole is one of them.

South Pole’s Carbon Project With Swisscom

South Pole started operations in 2006. Since then, it financed about 1,000 emission reduction projects in over 50 countries.

The company said that its founders and staff hold the majority share in the business.

After raising a couple of huge investments this year, the South Pole was able to reach more than $1 billion in value.

Some of them are from Singapore’s Temasek and the US’ Salesforce Ventures in February. And now, the climate solutions company is entering another partnership with Swisscom.

Swisscom is a major telecommunications provider in Switzerland. It took a minority investment in South Pole through a partnership on data digitization and sustainability.

World’s Largest Carbon Project Developer

In 2021 alone, South Pole closed deals to create over 60 new carbon projects worldwide. And it still aims to develop as many or more projects in 2022.

The firm holds a market share of about 20%, making it the world’s largest carbon project developer. It focuses on Asia where sources of carbon credit supply are huge.

While the company also trades carbon offsets, it’s not its core business. It uses trade only when offloading surplus volumes to intermediaries.

Likewise, it trades to buy certain credits on behalf of its business advisory clients.

Shifting its focus: From trading to providing solutions

Originally, South Pole’s core business was on carbon project development. But in the recent decade, the firm managed to create a massive climate solutions business.

This involves providing advice to about 3,000 companies on how to cut down their emissions.

Renat Heuberger, the company’s CEO, said that,

“The market value was solely in the upstream 16 years ago but it began to shift to the downstream from 2012.”

Currently, each of the two businesses (creating carbon projects and providing climate solutions) takes half of the firm’s activities. So, there’s now a balance between the two income streams.

Earlier this year, the carbon project developer made two key investments that boosted its market value. It acquired Carbonsink in Italy and invested in Sweden’s GoClimate.

The present partnership with Swisscom is on climate solutions. It is to help speed up South Pole’s investments in digitization and let its clients decide on a bigger scale.

Though trading carbon is one of its business activities, the company’s aim is more than that. It plans to focus on climate solutions where long-term investments from companies are pouring in.

After all, the biggest trend right now is investing in massive carbon reduction and removal solutions.

Original source: Quantum Commodity Intelligence

Brilliant Planet, a startup that harnesses the power of algae, shared its plan to capture carbon by growing algae in the desert.

Climate science emphasizes that fighting climate change requires removing carbon from the air. The recent scientific report from IPCC says that carbon removal has to scale up fast to limit warming to 1.5°C.

Companies have been working on various projects to capture and store CO2 permanently. The projects range from capturing carbon in concrete to sucking the carbon out of the air.

But no one has considered yet to grow vast quantities of algae in the world’s deserts to capture and store carbon.

Brilliant Planet’s Model on Permanent Carbon Capture and Storage

Since 2013, Brilliant Planet has been harnessing the power of algae as an affordable method of locking away carbon at the gigaton scale.

Its innovative process allows it to grow big quantities of algae in an open-air pond-based system in a desert.

According to Raffael Jovine, the startup’s co-founder and chief scientist,

“Per unit area, we can capture as much carbon, or even more, as a rainforest can. The difference is that, when a tree falls down, it returns 97% of the CO2 back to the air, whereas we can sequester all of it.”

The company’s production varies per test site. Its biggest production facility is in Morocco’s coastal desert with a 30,000m² area.

Once its first large-scale plant (1,000 acres) is complete, it can remove about 40,000 tons of CO2 per year. This is equal to emissions produced by about 92,000 barrels of oil. After full scale-up, the startup’s system projects to remove 2 gigatons of CO2 a year.

What makes Brilliant Planet’s approach to carbon capture and storage clever is this:

Instead of upscaling a test tube (growing algae inside a bioreactor), it’s downscaling the ocean.

It refers to how its proprietary system works in growing algae, capturing CO2, and storing it for good. Here are the main processes involved.

1. Pumps seawater from the coast to the facility. This water contains nutrients needed by algae to grow, plus the CO2 from the ocean.
2. Algae grow and capture carbon.
3. Harvests algae between 18 and 30 days.
4. Filters water and returns it back to the ocean. This water is less acidic.
5. Dries the algae and buries them under the desert sand where captured CO2 is stored.

Hence, the firm’s approach is using natural processes and natural algal blooms, and then taking them on land on a very large scale.

The Approach Value to Carbon Credit Market

Brilliant Planet’s CO2 capture and storage model looks promising in tackling climate change. But how valuable would it be for the carbon credit market?

Cost-Effectiveness

When happening in the ocean, algae blooms are only seasonal. The startup fixes this issue by using a proven method that can grow algae all year-round.

Better yet, its system can capture carbon at far less cost than other methods like direct air capture (DAC).

The company’s algae facility costs less than $50 per ton of captured CO2 to run. In comparison, DAC costs a lot more than that and up to 10x as much.

But same with DAC, the firm will sell carbon credits to those who seek to offset their emissions. The expected cost per ton of CO2, however, tends to be lower with algae due to the costs involved.

Measurability/Verifiability

Measuring CO2 stored in a vast rainforest or growing kelp in the ocean is very challenging. But this is not the case with Brilliant Planet’s system. Using algae grown on land to capture carbon and store it is easy to measure and verify.

The startup will bury the harvested algae close to the sand’s surface, about 1 or 3 meters underneath. The salty and dry environment of the desert will prevent the algae from decomposing.

As such, credit buyers can check out for themselves and verify that the algae with sequestered CO2 are buried indeed. There are GPS coordinates that can show them where the firm buried those algae.

Scalability

The company also believes that its system has high scalability. This is because there are more than 300,000 square miles of flat, coastal desert land in the world for the firm to use.

From Africa to South America to Australia, there’s a vast expanse of unused desert land that has no alternative use. Growing algae on them for carbon capture and storage would be useful.

Brilliant Planet is considering if it should “pre-sell” any of its carbon credits to companies wanting to cut emissions and planning to be net-zero.

Its operation will start soon and the building of its first commercial facility will be in 2024.

Five of the world’s biggest companies commit to investing $925 million in carbon removal technologies between 2022 and 2030.

The Frontier is an advance market commitment (AMC). Its main goal is to speed up the development of carbon removal technologies. At the same time, building strong future demand for such technologies.

Frontier also aims to help carbon removal startups scale up and lower the cost of sucking in a ton of CO2 from the air. As such, it will benefit firms and people looking to buy high-quality carbon offsets.

Stripe, Alphabet, Shopify, Meta, and McKinsey provide the funding for it.

Why Risk on Carbon Removal Technologies?

There has been strong evidence saying that companies worldwide have to slash emissions. But cutting down CO2 emissions alone is not enough to hit global climate goals.

Removing carbon already in the air is also a must.

In fact, climate scientists said that we need to remove up to 6 billion tons of CO2 each year until 2050.

Plenty of supply for carbon offsets today involves removal using nature-based solutions. The most common is using forests to suck tons of CO2 but this has a high risk of offset reversal. Fires can reemit the captured carbon back into the atmosphere, making the offset not real.

This is where technological solutions come in but they are not yet scaled up and they’re pricey, too.

Still, if we don’t hustle and learn the real potential of those technologies, we’ll put the earth in a very dangerous warming condition.

In fact, the IPCC report on climate change is clear that we should act now. And that may also mean relying and risking on carbon removal technologies even if we don’t know yet their 100% potential.

Luckily, Frontier comes in and closes this gap using a model fine-tuned by Stripe for over 2 years.

The Frontier Way of Taking Risk on CO2 Removal

Developing and scaling carbon capture technologies is risky. It has the same risk that governments take when developing vaccines.

But governments tend to move slow and they can’t always afford to compromise the public funds on risky ideas.

So, what do private companies do to support critical innovations like this?

Here’s how Frontier does it.

Startups that have carbon removal technologies can pitch to Frontier through RFPs. Then a pool of experts from Frontier will assess those technologies using a set of criteria below.

Once the experts are happy, Frontier then negotiates a price per ton of CO2 captured and delivers them as tons of offsets.

As the startups mature, they can use the purchase commitments to raise much more sum. They can then use it to build large-scale plants via debt markets with cheaper capital for less risk.

Frontier fund expires by 2030 but it still welcomes more investors to join and grow the money it can spend on more investments.

Stripe and Shopify have each run a Frontier-like fund that supported 14 and 22 startups. Conversely, Meta and Google used nature-based offsets to hit net-zero. But they’re showing interest in carbon removal technologies, too.

When it comes to cost, startups should be able to remove each ton of carbon at around $40 to $140.

The trend in carbon removal technologies seems to go up. Yet, this must not take away the world’s vital task of reducing emissions now.

Spending on emission reductions, in fact, had amounted to about $750 billion in 2021. That huge money went to investing in clean energy projects. In this case, a less than $1 billion investment to support carbon removal by 2030 fades in comparison.

So, scaling technologies that suck in carbon from the air and store it for good need a lot more money.