Frontier makes first carbon-capture commitments

Frontier, the nearly $1 billion tech-backed effort to help fund early-stage carbon removal technology, has invested $2.4 million in six companies through its first pre-purchase agreements.

Why it matters: Frontier believes putting a price tag on its demand will help fuel the growth of the sector to as much as $1 trillion.

What's happening: Stripe, Frontier's lead backer, has committed to invest $2.4 million via pre-purchase agreements across six carbon capture startups — AspiraDAC, Calcite-Origen, Lithos Carbon, RepAir, Travertine and Living Carbon.

• It is paying between $500 and $1,800 per metric ton of carbon captured in each contract.
• Stripe also committed an additional $5.4 million to the projects, dependent on them achieving agreed-upon technical milestones.

How it works: Stripe is fronting the money prior to the startups capturing carbon. If the companies fail to do so for whatever reason, Stripe does not get its money back.

• Many of its initial investments will come through similar pre-purchase agreements, Stripe head of climate and Frontier lead Nan Ransohoff tells Axios.
• Once the industry matures, it will move to larger offtake agreements in the tens of millions of dollars range, she says. In those agreements the money will be transferred once the metric tons are delivered instead of being provided upfront.
• "If we don't do the pre-purchase work, there won't be any company to buy from" for offtakes, Ransohoff says.

What they're saying: "It is both humbling and intimidating," Ransohoff says of the early stage of the carbon capture industry and the progress it still needs to make to scale.