Aggregating demand and supply: How Stripe is supporting the CDR market development

Currently valued at USD 50 billion[1], Stripe, the financial infrastructure company, ranks as one of the most highly valued venture-backed private companies in the U.S. Beyond the proficiency in streamlining online transactions and payments, Stripe's dedication to addressing environmental concerns has become a significant part of their identity. Their commitment to mitigating climate change is not only an integral component of their corporate ethos but is also redefining what it means to be a forward-thinking business. As Stripe steers the corporate world toward greater climate engagement, they illustrate that thriving in a future dominated by low-carbon initiatives is not only possible but can also be a crucial aspect of a company's strategy for succeed.

As Stripe's Climate Lead, Nan Ransohoff has noted, at the end of the day, Stripe is in the business of economic growth just like any other company[2]. According to Nan, climate change presents perhaps the biggest threat to Stripe’s long-term plans, and although unconventional, it is central to their approach[2]. The company is not solely focused on immediate returns on their investments, but rather recognizes that although some investments may take time to generate significant results, in the future, they will yield the best financial outcomes. As an infrastructure company, adopting a long-term perspective is imperative, and this unique position in the ecosystem is central to Stripe's efforts in climate change mitigation.

In 2019, Stripe embarked on its climate journey announcing that it would invest USD 1 million annually in permanent Carbon Dioxide Removal (CDR) solutions with the focus on the potential cost-effectiveness and scalability of the technology in the future[2]. While the response from the CDR community was overwhelmingly positive, Stripe realized that many of their users, wanting to contribute to climate action, faced challenges in identifying effective ways for doing so[2]. Recognizing the unmet demand for practical and effective CDR solutions, Stripe launched Stripe Climate – a platform that enables Stripe users to either purchase a specific number of tons of offsets or allocate a portion of their revenue toward CDR initiatives[3]. The initiative was not conceived to immediately augment Stripe's profits or those of its customers. Instead, its significant contribution lies in building strong customer loyalty and garnering respect within the industry. This offered businesses of all sizes opportunities to easily contribute to climate change mitigation while conducting their routine operations.

In 2022, Stripe joined forces with Alphabet, Meta, Shopify, and McKinsey to launch Frontier and commit USD 925 million over eight years towards the development of CDR solutions[3]. Frontier acts on behalf of both buyers and suppliers of CDR purchases to vet and pay the suppliers and pool the demand of the buyers. Employing the Advanced Market Commitment (AMC) approach, Frontier aims to send a strong and immediate signal of demand, thereby encouraging further innovation and development of new CDR technologies. As such, Frontier partners both facilitate small volumes of pre-purchase agreements for new CDR technologies and invest in future tons of CDR to help scale those technologies[3].

Recently, Frontier announced its first large-scale deal, a USD 53 million agreement with startup Charm Industrial to capture and permanently store 112,000 tons of CO₂ underground[4]. As Charm Industrial's CEO remarks, the significant offtake deal with Frontier underscores the importance of commitments of such scale in advancing climate solutions[4]. Frontier’s investment empowers the start-up to accelerate its CDR efforts, reflecting the growing momentum among corporate climate action[4].

On the road climate resilience and net zero, CDR is indispensable. Stripe and its partners in Frontier have taken important steps to enable the development of the market necessary for the required CDR solutions to evolve. And not only that, but Stripe has also made CDR a competitive strength creating customer loyalty with Stripe Climate. Stripe’s and Frontier’s story illustrates what corporate resilience and climate leadership can look like and proves that companies can play a vital role in finding climate solutions not only for themselves but for an entire ecosystem.

[1] TechCrunch: “Stripe Now Valued at $50B Following $6.5B Raise”, 2023 

[2] Frontier: “An Advance Market Commitment to Accelerate Carbon Removal”, 2022

[3] TechCrunch: “Stripe Climate is a New Tool to Let Stripe Customers Make Carbon Removal Purchases”, 2020

[4] Frontier: “Frontier Buyers Sign First $53M in Offtake Agreements with Charm Industrial”, 2023