Two dozen companies plans to buy $53 million worth of carbon-removal credits from Charm Industrial.
The startup converts corn stalks and other plant waste into bio-oil, then pumps it underground.
Climate scientists say carbon removal is essential to keep global warming below catastrophic levels.
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Not all oil is bad for the planet.
Two dozen companies announced plans Thursday to buy $53 million worth of carbon-removal credits from Charm Industrial, which converts corn stalks, leaves, and other waste leftover from agricultural harvests into bio-oil. Charm then pumps that carbon-rich oil underground to be permanently stored.
It's a way to prevent organic matter from breaking down and further warming the atmosphere. The company says the oil hardens within days and it estimates the carbon dioxide is locked away for 1 million years.
The agreement, one of the largest to date involving the carbon-removal industry, would prevent 112,000 tons of carbon dioxide from entering the atmosphere between 2024 and 2030. That's far more than the 6,055 tons that Charm Industrial has removed to date under pilot programs.
"This purchase is super helpful for fundraising and going out and building up capacity," Peter Reinhardt, the company's cofounder and CEO, told Insider. "It's hard to build capacity for something that doesn't have demand, so a signed contract is really impactful."
The deal was facilitated by Frontier, which was launched last year by Stripe, Alphabet, Shopify, Meta, and McKinsey Sustainability aimed at jump-starting the carbon-removal market with a $1 billion commitment. Frontier had spent only $5.6 million on carbon removal before Thursday's deal with Charm Industrial.
Climate scientists say that carbon removal is essential to stave off catastrophe. Even if countries reduce greenhouse-gas emissions, it likely won't be fast enough to keep global temperatures from rising above 1.5 degrees Celsius compared with preindustrial levels. Meeting that global climate goal will likely require billions of metric tons of carbon dioxide to be removed from the atmosphere by 2050.
There are various carbon-removal technologies. Startups like Climeworks are using fans to suck carbon dioxide out of the sky, while others are using enhanced weathering that speeds up the natural ability of minerals to store carbon dioxide.
For its part, Charm Industrial buys agricultural waste from farmers and heats it to high temperatures in a contraption called a pyrolyzer. The process creates both bio-oil and biochar. The bio-oil is pumped into wells and salt caverns that store industrial waste or were left behind by oil and gas companies — and that the Environmental Protection Agency regulates.
"This is an opportunity to clean up these end-of-life oil and gas assets," Reinhardt said. "We can take these abandoned assets that may be leaking oil or methane, refill the empty formation and then plug it or properly seal it off."
Farmers can add the biochar to their fields, which can improve soil health and sequester more carbon. But Charm Industrial doesn't account for that in its measurement of how much carbon the company is removing. The life-cycle analysis includes the total carbon stored, minus emissions from transportation, pyrolysis, and the injection underground.
Today, Charm Industrial charges $600 per ton of carbon removed, but Reinhardt said that could drop to less than $100 by 2040 as the company scales.
Growing the company will require access to more agricultural waste, known as biomass. It's also used in renewable diesel and sustainable aviation fuels.
Yet Reinhardt isn't worried about a biomass shortage.
"I would say this is a theoretical concern we encounter in academic circles, but in practice is very far from reality," he said. "Maybe at a really massive scale there starts to be some questions about how we are going to compete for biomass. Right now, we have biomass coming out of our ears."
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