Shopify’s Investments: Removing Carbon Dioxide and Offset Emissions
Since 2019, Shopify has invested close to $55 million in 40 startups that have developed methods for removing carbon dioxide from the air — from direct air capture devices to spreading crushed rock on farmland for faster soil absorption. These investments are part of Shopify’s strategy to offset its emissions without buying traditional carbon offsets. According to Stacy Kauk, Shopify’s head of sustainability, these investments have removed 84,400 metric tons of CO2 so far. While this is a small amount compared to the gigatons in reductions needed, it is almost double the amount that Shopify reported in early 2023. Furthermore, the company has recently been involved in two high-profile deals that will remove an additional 254,000 metric tons of CO2.
Key Criteria: Assessing Pilot Projects for Carbon Removal
When assessing whether a successful pilot project is worth scaling into a commercial project, Shopify uses three key tests. Firstly, they consider the financial model, including potential maintenance costs and factors that could affect operational uptime. Secondly, they evaluate the unit economics to determine if the facility will deliver enough capacity to make an investment worthwhile and whether the price curve for carbon removal is favorable. Lastly, they assess the staying power of the project, considering factors such as the potential evolution of the technology and space requirements.
The Challenge of Verification: Ensuring Reliable Carbon Credits
One of the challenges in the carbon removal market is the need for better verification methods and standards. The controversy surrounding claims related to a forest conservation project in Zimbabwe has highlighted the uncertainty and lack of reliable verification methodologies. Shopify is working with companies like CarbonCure, which stores captured CO2 in cement, to develop better verification methods. They are also pushing for the establishment of standards for monitoring, reporting, and verifying emissions removed by various carbon removal technologies.
Ocean Capture: Controversial but Promising Carbon Removal Solution
Shopify’s team has explored various carbon removal techniques, and one with “massive potential” is ocean alkalinity enhancement. This method involves increasing the sea’s alkalinity by adding minerals to beaches or the water’s surface. The chemicals convert dissolved carbon dioxide in seawater into carbonates and bicarbonates, capturing more atmospheric CO2 over long periods. However, some scientists are concerned about potential unintended consequences on the marine environment. Despite this controversy, Shopify is working with startups like Running Tide, Planetary Tech, and Captura, which are developing different approaches to ocean capture.
Shopify’s Strategy Revealed: Insights for Other Companies
Shopify’s sustainability strategy offers insights for other companies looking to engage in carbon removal initiatives. One key takeaway is the importance of investing in and supporting early-stage startups and technologies. By intentionally overpaying for carbon removal projects, Shopify aims to boost corporate interest in the market and kickstart its growth. Another crucial aspect is the need for better verification methodologies and standards to ensure the reliability and transparency of carbon credits. Shopify is actively pushing for the development of such standards and is working with companies that are implementing reliable verification processes. Finally, Shopify recognizes the potential of ocean capture as a promising carbon removal solution, despite the controversies surrounding it. The company is collaborating with startups in this space, aiming to find a framework that addresses stakeholder concerns and makes the use of the ocean as a carbon sink more sustainable and scalable.
Analyst comment
Positive news: Shopify’s investments in carbon removal methods have resulted in the removal of significant amounts of CO2. They have also established key criteria for assessing and scaling pilot projects. Furthermore, Shopify is working towards improving verification methods and standards in the carbon removal market. They are exploring ocean alkalinity enhancement as a promising solution. Shopify’s sustainability strategy offers insights for other companies to engage in carbon removal initiatives, including investing in startups and supporting early-stage technologies.
As an analyst, this news suggests that the market for carbon removal technologies will likely experience growth as more companies follow Shopify’s lead in investing and supporting such initiatives. The focus on verification methods and standards indicates a push for increased transparency and reliability in the market. Additionally, the exploration of ocean alkalinity enhancement shows potential for the development of alternative carbon removal solutions.
