Microsoft signs deal on carbon removal from pulp and paper mill
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Microsoft inked a multimillion-ton CO2 deal with CO280, a startup that says it has cracked the code to scaling large-scale removal tethered to pulp and paper mills.
Why it matters: CO280's offtake deals with Microsoft and other buyers could advance integration of carbon removal into huge, incumbent industrial sectors.
Driving the news: Microsoft's deal is for 3.7 million tons over 12 years. It follows CO280's smaller, $48 million deal with the Frontier consortium to remove 224,500 tons of CO2 between 2028 and 2030.
How works: The startup is working with a Gulf Coast pulp and paper mill owned by a big public company — it's not yet saying which one.
- The project would be a joint venture with the paper company to attach carbon capture to the mill's boiler stack and pipeline the CO2 to sequestration sites.
- OK, that's CCS. The removal part is that CO2 absorbed by the trees is never re-emitted at the plant when biomass waste is combusted.
"The trees do the heavy lifting. They absorb the CO2," CEO and co-founder Jonathan Rhone tells Axios.
- When trees are turned to pulp and paper at mills, wastes are burned in huge "recovery boilers" that would now be fitted with CO2 capture.
- "That's why the CO2 is biogenic. So basically we're leveraging off of that entire existing value chain," Rhone said.
State of play: It's the first of what Rhone called a dozen-plus projects in "active development" with mills.
- Rhone said private financing — enabled by the certainty of offtake revenue — for the first project should be finished in six to nine months. A final investment decision should come in 2026, he said.
- They hope to have the project's first phase of 400,000 tons of annual capacity running in early 2029.
- He said there's one more removal buyer, yet to be disclosed, after Frontier and Microsoft. They together have deals for all the CO2 for the first 12 years.
Reality check: There's a long, uncertain road for transforming removal startups' methods into meaningful weapons against global warming.
- But Brian Marrs, Microsoft's senior director of energy & carbon removal, said CO280 has "proven how to combine innovative engineering with strong commercial development."
The intrigue: Rhone didn't disclose the finances of the Microsoft offtake deal, but CO280's site says their services are under $200 per ton.
- The phase one capital costs are in the hundreds of millions of dollars, he said. The capture tech comes via SLB Capturi.
Catch up quick: CO280 was founded in 2021 and has raised seed and Series A rounds, but hasn't disclosed how much.
- Equity investors are NPG Energy Capital Management, the Grantham Foundation, the Business Development Bank of Canada, and Toyota Ventures.
The bottom line: The purchase deals are a milestone, Rhone said.
- "It validates the business model and it provides us with that long-term, bankable offtake agreement. ... We can proceed and create a playbook and scale this up."
