San Francisco-based startup Charm Industrial is placing a big bet on corn stalks and with a newly sealed $53 million deal from Frontier, the public benefit company of the Stripe-owned tech giant syndicate, several major corporations are putting their money into corn too with the goal of using it to permanently remove thousands of tons of CO2 from the atmosphere.
How much exactly? Between 2024 and 2030, the startup has agreed to remove 112,000 tons of carbon dioxide. That’s the equivalent of taking nearly 25,000 cars off the road for a year, recycling over 5,500 garbage trucks worth of waste, running 31 wind turbines for a year, or that which would be sequestered by about 1.8 million tree seedlings.
So why invest in removing CO2 rather than doing any of those things?
Well, to prevent the most devasting effects of climate change, all of these things must happen, from transitioning to renewable energy and electrifying transportation to restoring our planet and reducing waste.
However, the general scientific consensus around climate change is that in addition to decarbonizing, there needs to be a plan for residual emissions from human activities that are harder to decarbonize like aviation, chemical production, and of course, farming.
That’s where carbon removal, and more specifically, Charm and corn come in.
Charm takes excess organic material like corn stover, which includes corn stalks, leaves, and cobs, leftover in fields after harvest, and heats it in a machine called a pyrolyzer to unimaginable temperatures — over a thousand degrees Fahrenheit. This converts most of it into bio-oil which Charm then buries into old oil and gas wells where it will be stored for millennia.
This corn waste would otherwise decay and release CO2 into the air. Corn stover is already used to produce the renewable fuel ethanol, making it the primary biomass in the U.S. However, while it has a lower carbon footprint than traditional gasoline, it still emits CO2. Plus when not all corn stover is converted into fuel and simply burning it results in more emissions. So, from an emissions standpoint, burying it presents the best option for getting rid of it.
In 2021, Charm announced that it removed and permanently stored 5,000 tons of CO2, making it the "largest permanent carbon removal delivery of all time."
Now, they're aiming to up that number.
According to Charm’s CEO Peter Reinhardt, via CNBC, there are about 2 million abandoned oil and gas wells in the U.S. and owner-operators are eager to find another use for them. With the $53 million deal, Charm is putting those wells to work.
Last year, Charm was working on the edge of Kansas corn fields, moving rolled bales of corn stover into its white dinosaur-size semi-trailer, converting and burying it for customers including Microsoft, Shopify, and Stripe for $600 a ton. With the new deal, Charm not only adds to its list of big-name customers, but it may even get its high removal price down.
Corn waste probably isn’t the first thing you think of when you think about planet-warming emissions, and while it is not equivalent to gas-guzzling cars or greenhouse gas-spewing fossil fuel plants, across the U.S. corn belt, corn stover removal represents significant opportunities for greenhouse gas reductions.
Carbon dioxide removal (CDR) is taking CO2 out of the atmosphere and storing it in the ground permanently either by injecting it into rocks, planting it in plants, burying it in soil, or even shooting it all the way into the Earth’s crust. This diversity of storage options reflects the variety of CDR technologies: direct air capture, reforestation, wetland restoration, soil sequestration, and enhanced rock weathering, just to name a few.
As the Intergovernmental Panel on Climate Change puts it in its CDR factsheet, CDR is required to limit global warming to 1.5°C, positing that any mitigation strategy is incomplete without it. However, the IPCC also makes clear that CDR is not a substitute for deep emissions reduction, and is rather a complement to other mitigation strategies.
Considering the recent news that within the next five years, we will likely temporarily breach the 1.5°C marking, investment in every strategy is heightening in urgency.
Despite the consensus of its necessity, there is scientific controversy around carbon removal as a current or future climate solution, with some like Columbia climate scientist, David T. Ho, arguing that the focus should be on rapid decarbonization now and residential emissions later.
CO2 removal puts the “net” in net zero, Ho writes, but to him, that's the next step. As CDR projects reach new heights, seeing the most projects ever in 2022, it’s becoming increasingly clear that the West’s major corporations are keen on pouring money into that future now.
Who's getting in on the corn CDR business?
The $53 million paid to Charm for its carbon removal services is on behalf of Frontier member companies: Alphabet, Autodesk, JPMorgan Chase, McKinsey Sustainability, Meta, H&M Group, Shopify, and Workday.
On top of that, big businesses like Aledade, Boom Supersonic, Canva, SKIMS, Wise, and Zendesk have committed bales of money to buying carbon removal with Frontier via a partnership with Watershed, a carbon accounting firm.
Together, these companies represent billions, and prior to Thursday’s announcement of the Charm deal, Frontier had already spent $5.6 million on buying nearly 9,000 tons of contracted carbon removal from early-stage carbon removal startups.
These millions were paid in a variety of small-scale checks — about $500,000 a pop — to a myriad of CDR companies via prepurchase agreements made to catalyze growth in a slowly maturing industry, currently in its infancy.
Now, the Charm deal is the syndicate’s first deal contingent on delivery, representing not only a development in the young CDR industry itself but Big Tech’s mission to offset its massive carbon footprint, especially that of the “big five:” Apple, Amazon, Alphabet, Meta, and Microsoft.
Each of the big five has lofty investments in CDR, whether it be Alphabet and Meta’s investments via Frontier, Apple’s $200 million investment in removing 1 million tons of CO2 equivalent a year by 2025, Microsoft’s $1 billion Climate Innovation Fund which includes portfolio CDR companies Climeworks and Heirloom, or Amazon’s nature-based carbon removal ambitions.
Just this week Microsoft made headlines with another huge carbon removal deal with Danish energy company Ørsted to purchase credits representing 2.76 million metric tons of carbon to be removed over the next 11 years.
Even with the variety of CDR, and stamina behind investment and credit-purchasing, removal as a whole is still quite expensive.
Right now Charm sells and delivers carbon removal at about $600 a ton, but with more investment in CDR, the price of removal could go down making it more accessible and thus, scalable. Charm, and other CDR ventures, are currently a drop in the bucket of the nearly 40 billion tons of annual CO2 emissions worldwide.
While we are a long, long way from net-zero, the money put behind CDR companies is an effort to scale up cheaply and quickly.
“For us, talking to investors and so on, it demonstrates really clear and significant demand for carbon removal, and specifically our approach and bio-oil sequestration,” Reinhardt said via Axios, emphasizing Frontier's rigorous vetting process. The deal with Frontier buyers is “really helpful in the early, steep part of that cost curve,” he said.
Between 2024 and 2030, the Frontier deal will decrease Charm’s selling price by 37% and Frontier hopes that the price will drop a drastic 75% if some government incentives, like those in the Inflation Reduction Act, for example, materialize. Charm believes that one day they can get their price down to $100 a ton.
According to Reinhardt in the long run, “bio-oil sequestration can probably be the cheapest — or close to the cheapest — way of actually permanently removing carbon from the atmosphere and quite scalable.” So, the CEO believes that one day Charm’s solution “can get up in the multiple billions of tons per year.”
When the world needs to remove 0.96 billion tons of carbon dioxide each year by 2030, compared to 2020 levels, in order to limit global warming to 2°C, the challenge of Charm’s ambitions is on.