Companies and CEOs Are Throwing Money at Carbon Removal. What is Philanthropy’s Role?

It seems like every month, another household corporate name makes a big climate change pledge. Over the past year alone, IBM, Uber, JetBlue and many others have made sizable commitments.

While past experience tells us we should treat such announcements with skepticism, read the fine print, and track the follow-through, some serious cash is being promised. And one big winner has been carbon dioxide removal—efforts to draw CO2 out of the atmosphere through a variety of methods. (This is sometimes referred to as carbon capture, although that term also holds a more specific meaning.)

Microsoft created a $1 billion climate fund focused on such technologies last year. Unilever’s brands will invest 1 million euros on projects that include reforestation and carbon sequestration. United Airlines recently promised a multimillion-dollar investment in direct air capture. And FedEx just made a $100 million gift to Yale in support of research on removing carbon from the atmosphere.

While much of this spending spree will likely flow in the form of traditional investments, a lot of it is philanthropic, and we can expect many more corporations, institutional philanthropies and large donors to engage with this topic. But whether and how the sector does so warrants scrutiny, as carbon removal remains a contentious topic in the climate movement.

Leading climate analyses, including most of the IPCC’s, indicate some form of carbon removal is essential to a timely net-zero future, but they simultaneously emphasize that actual emissions reductions make up the vast majority of the change required. Carbon removal is quickly emerging as a popular issue in billionaire giving and corporate climate action alike, but the technologies are notably nascent, and efforts to bring them to scale in time face considerable challenges and uncertainties. In other words, carbon removal could be a useful niche for philanthropy, or a way to rationalize business as usual.

But before we get any deeper into the promise and pitfalls, let’s review some recent corporate carbon removal announcements, and just how bullish we should be about them.

A big pledge from a shipping giant

One of the most recent carbon capture gifts came at the beginning of March, when Yale University announced $100 million from FedEx to fund research into pulling carbon from the atmosphere using natural methods.

The donation is just one sliver of FedEx’s bigger pledge on climate. On the same day, the Memphis-based shipping giant committed to making its global operations carbon neutral by 2040. FedEx says it will spend more than $2 billion, which includes the pledge to Yale, to electrify its 180,000-vehicle fleet, develop sustainable fuels, and capture and sequester carbon.

Obviously, a business premised on shipping anything anywhere in the world in a hurry produces a lot of emissions. FedEx, after all, claims to be the largest cargo airline in the world—and air transport has, thus far, proved to be a particularly challenging sector to decarbonize. The attention to carbon removal suggests FedEx’s awareness that its business model doesn’t fit neatly into emissions reduction goals.

Enter the new donation to Yale. With FedEx funding, the university will launch a Center for Natural Carbon Capture, support four professorships and several postdoctoral fellows and graduate students, and fund both carbon capture research itself and academic conferences. (FedEx’s CEO, by the way, got his bachelor’s degree from Yale.)

Any such pledge should raise the question of whether other elements of a company’s operations are aligned with its stated goals. That includes political donations. On that front, FedEx is ranked as one of the top 100 largest campaign contributors in the United States by the Center for Responsive Politics. And there’s a partisan tilt to its giving, with 64% of donations over the last three decades going to Republicans, the party that has overwhelmingly obstructed climate action for years. FedEx has also spent more on lobbying than any other company in the air transport industry (with the occasional exception of Boeing), regularly accounting for roughly 10% of all the sector’s lobbying dollars.

Finally, it’s always helpful to put these figures in perspective. Yes, $2 billion is a lot of money, particularly compared to a philanthropic sector whose giving on climate totaled $1.6 billion in 2019. But keep in mind that this giving will take place over more than a decade. The sum also reflects FedEx’s massive size. The company’s quarterly revenues recently passed $20 billion for the first time, with $1.23 billion in profits.

The corporation’s giving could fund some important and necessary work, but FedEx’s investments seem to be following the lead of investors and competitors, rather than heralding a transformation into a climate leader.

Elon Musk’s carbon capture prize

Last month, Elon Musk announced a $100 million competition to develop scalable methods to remove carbon dioxide from the atmosphere, whether through natural or industrial means. In other words, the billionaire head of an industry-redefining set of companies offered a big prize to whoever can come up with a method to save humanity from its addiction to fossil fuels. If that sounds familiar, it’s because we’ve been here before.

In 2007, British entrepreneur and billionaire Richard Branson and partners launched the $25 million Virgin Earth Prize (big money back then!). After being stuck in a holding pattern for years, the judges decided no entry satisfied the prize’s criteria and the competition ended without awarding a cent, let alone naming a winner. (The prize’s website does note that Virgin is now invested in a number of ventures seeking climate solutions.)

Technological advancements and rising investment in this sphere suggest Musk’s iteration has a greater chance of success. But Branson’s competition is a reminder that there’s no guarantee such prizes will yield solutions, or that any new discoveries would ever make it into widespread use.

To be fair, the Tesla CEO has more credibility when it comes to his commitment to transitioning away from fossil fuels. But stepping back a bit, Branson offers a cautionary tale about climate pledges in general. Before founding the prize, he committed to spending $3 billion over a decade to develop a low-carbon fuel, earning himself dozens of positive headlines. Yet he appears to have spent less than $300 million on the effort, as laid out in Naomi Klein’s book “This Changes Everything.”

It’s an example worth remembering as we see companies and CEOs pledge large sums, with carbon capture research a central plank of their climate response. Considering Branson cited falling profits from Virgin Airlines as part of the hold-up, how much faith can we put into these Hail Marys from businesses with uncertain prospects in a world destabilized by climate change?

An energy company backs plant-based carbon capture

On the smaller end of the scale, Sempra Energy donated $2 million to the Salk Institute in November to support efforts to enhance the ability of plants to store carbon and adapt to a changing climate.

The San Diego-based Fortune 500 company is the lead sponsor of Salk’s five-year project “Sequestering Carbon Through Climate-Adapted Sorghum.” It aims to develop a variety of that grass not only suitable for growing in Southern California, but also better equipped to store carbon while being used for grain production, grazing or other purposes.

Sempra also has a philanthropic arm, the Sempra Energy Foundation, which does grantmaking in the communities where the company operates and recently distributed $1.75 million in COVID response funding, but it was not involved in this gift.

As one might expect of an energy company, Sempra’s holdings are deeply dependent on fossil fuels. Born out of a merger of California utilities, it operates Southern California Gas Company, the largest natural gas distribution utility in the United States, and is also deeply invested in liquified natural gas facilities.

Payments processor—and carbon-capture leader?

Any accounting of corporate-related efforts on carbon dioxide removal would be incomplete without mentioning Stripe. The payments processor, which is used by garage-based beauty startups and tech platforms like Shopify and DocuSign alike, committed in 2019 to buy at least $1 million worth of credits annually from companies that remove carbon dioxide from the atmosphere and sequester it for the long term.

Then late last year, the company launched Stripe Climate, which allows its customers to pay for carbon removal, as well, by redirecting a portion of their proceeds to the same carbon removal technologies selected by Stripe for its purchases. Last month, the option went global. Companies are not told how much carbon their purchases offset, making the choice more of a moral stand than a new ‘selling of indulgences.’

Unlike the previously mentioned examples, the company’s engagement has been through investment, not philanthropic gifts. However, the line here is fuzzy. By buying now while the price is high, Stripe is essentially subsidizing the development of these technologies. And by making it easy for its own customers to do the same, it leverages its huge network to grow those subsidies.

Of course, all of these moves position Stripe as a climate-conscious company at a time when that perception is increasingly a differentiating factor for consumers. Critics have noted the project comes as Stripe expanded its services—and thereby its value to customers. Finally, while the investment it has made is significant given the size of the carbon capture market, it is small versus the size of Stripe, whose most recent round of fundraising valued it at more than $95 billion.

Regardless of its motivations, Stripe has won prominent admirers. Stripe’s initial foray may have seemed to casual observers incongruous with its core business, extending that system to its customers was savvy and innovative business-wise, but may also prove impactful. Its efforts muddy the picture of what should be considered corporate philanthropy on carbon removal—and makes it clear there are many paths to impact.

A good role for philanthropy? Or greenwashing?

More corporations are hitching their progress on climate to carbon removal techniques, and billionaires like Musk, Jeff Bezos and Bill Gates are all getting behind this technology. Some of this interest can be critiqued as self-interest, but that’s not the whole picture. The best scientific projections rely on carbon removal to ensure temperatures stay below disastrous levels. And aside from certain natural approaches like planting trees—which has its own limitations—most of these measures are nowhere near ready for prime time. In that respect, funding is dearly needed.

Yet such pledges could prove to be a dangerous distraction from the central work of emissions reductions, or at worst, shameless greenwashing as the planet redlines. There is a risk that focusing on this technology will give industry the license to proceed without making difficult and necessary changes, simply by promising their emissions will be neatly cut by some future technological leap that may not materialize in time, if at all.

What role, then, should philanthropy play here? One approach for funders with a good-faith interest in carbon removal could be supporting the analysis and tracking of these pledges, a cause some nonprofit organizations have taken up. Funding the many groups that publicly push companies to tighten and accelerate those plans could be another. Similarly, funders can support efforts that pressure companies to align their political spending and other projects with their climate pledges. And foundations can also help elevate and empower the wide-ranging environmental justice concerns about carbon capture.

Philanthropy might look for a model in an area like alternative proteins. Investor money has proved more than enough to fund that field’s continued growth. Indeed, many funders in the farmed animal space have invested heavily in the hope of growing their assets. Yet philanthropy has also played a role in building the broader network and expanding open source information in that field. Similarly, grantmakers’ varying approaches to geoengineering, from supporting governance to funding early stage academic research, might offer models.

Pushing for government involvement could be another route—either for regulatory or funding reasons. The World Resources Institute, for instance, estimates $6 billion a year in federal funding is needed over the next 10 years—and then additional support for deployment—to achieve carbon neutrality by 2050.

All in all, while there is a real danger of carbon removal receiving disproportionate attention, it also feels like a space where philanthropy can play its classic role as convener and catalyst. The spigot on private-sector money appears to be opening, but funders may be able to exert some influence on where and how it is spent.

This post has been updated to add clarity and further sourcing on the challenges in bringing carbon dioxide removal technologies to scale.

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