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The Great Carbon Removal Supply Shortage

April 20, 2022

Last year the carbon removal industry was only able to pull thousands of tons of carbon from the air. Buyers like Stripe, Shopify and Microsoft struggling to buy more. And with announcements coming in last week from from Frontier to buy $925M of carbon removal, and more in the works from others big buyers,  this supply crunch is only going to get tighter.

For the near future, carbon removal is now in a supply constrained market. This is a huge shift. (and becasue of that this is a long email. YouTube video here)

This is a message to everyone on the supply side about how to take advantage of it while it lasts. I first wrote you about this back in June, and today it's a much clearer story.

When I say that carbon removal is in a supply constrained market, what does that mean? "Supply" means pulling molecules of carbon dioxide out of the atmosphere and storing it. "Demand" means paying for carbon removal credits. Supply constrained means that there's just not enough carbon removal and lots of buyers...kind of like trying to buy a car during the COVID pandemic. What customers demand is carbon removal and they just can't get their hands on enough.

The thing is, I've lived most of my life in a demand constrained world, not a supply constrained world. Likely so have you. Here's examples:

Demand-constrained World:

I'm curious about supply constrained markets...most of my experience is in trying to buy stuff during COVID.

Supply-constrained World:

In a supply constrained market, memories of Black Friday lines at Best Buy seem quaint, today that experience is commonplace.

This message is to founders in carbon removal, people that are working on creating a new supply for carbon removal, people that are joining teams to help grab onto molecules of carbon dioxide. You now live in this supply constrained carbon removal market. It means that when you're going to a customer or an investor, you have the advantage. You get more choice of who your customer is, who your investors are, and what the terms are. In a supply constrained world, maybe your team doesn't have time for that long-ass RFP, you just sell your carbon to someone who pays cash.

It's not insane like the supply-constrained Bay Area housing market...yet. But these new committments to buy carbon only make things tighter in the short term. It's unclear how long this window will last, maybe the next 5 years or so. But I think it's important for founders to take advantage of it while they can.

Now, I'm not saying the demand issues are solved forever. Long term, clearly there's a lack of demand for carbon removal at the gigaton level. There's a trillion tons of excess carbon in the air and we have no clear roadmap for taking it out. If you had a billion tons of carbon removal supply today, the reality is you wouldn't be able to sell it at a good price if at all. So keep your eye on on this longer term because maybe it will switch back to being a demand constrained market. But we're nowhere near close to that, and in the short term there's billions of dollars that are lined up to buy carbon and customers are lining up outside the door.

I think that AirMiners has a responsibility to help founders understand this and appreciate this. We're here to help people create new solutions and get to the stage where they're able to sell carbon to customers. How do we nurture great new ideas to expand the supply pipeline of carbon removal?

Innovators in the AirMiners community are already thinking about hundreds of new ideas, and we're starting the next batch of the AirMiners Launchpad accelerator next week. Adina and Jason interviewed 52 teams out of a whopping 153 applications. There's incredible stuff that's that's coming into the pipeline and we're looking forward to working hands on with as many of these teams as we can.

Take advantage of while you can. Enjoy having customers lining up outside your door, it may not always be the case. But for now, make use of it on the path to gigaton scale carbon removal


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