A few years ago, as CEO of the tech company Segment, Peter Reinhardt started researching how the company could offset its emissions. He didn’t like the options. Nature-based solutions like reforestation are difficult to measure accurately, and they risk disappearing if, say, a forest burns. He started working with friends to look for new approaches.
The solution they developed, and launched as a startup called Charm Industrial, is unique: Inside a machine called a pyrolizer, agricultural waste or other biomass that would otherwise end up decomposing or being burned—releasing its CO2 back into the air—is heated without oxygen, turning it into a gloopy, thick, black liquid that looks a little like crude oil. “We sort of caramelize it or turn it into a carbon liquid soup,” Reinhardt says. “And then we inject that carbon soup deep underground.”
Earlier this year, the company started transferring the plant-based oil into an injection well in Oklahoma, putting the oil thousands of feet underground, where it’s expected to stay permanently in place. While other carbon sequestration projects inject CO2 gas underground, Reinhardt says the oil is easier to work with. CO2 is buoyant, so it has to be carefully monitored to make sure it doesn’t escape. “Bio oil is denser than the water that inhabits these subterranean layers,” he says. “So it actually sinks after injection. And then it also solidifies in place. You don’t need nearly as much monitoring, because the physics are kind of on the side of it staying underground.”
In the past, some startups have tried to produce bio oil that could be used as a fuel. But the oil is far less energy dense than crude, and the technology didn’t work. As a “negative emissions” solution, though, the composition of the oil doesn’t matter. The process can separately be used to produce green hydrogen or synthetic gas for industries like steel production, and Charm Industrial plans to work in both markets. But it’s launching first in the world of offsets, targeting companies that are looking for ways to permanently sequester emissions.
Stripe, the startup’s first customer, ordered 416 tons of CO2 removal in May 2020—before Charm had a chance to test and prove that its approach would work. Stripe is aiming to help kick-start the burgeoning carbon removal industry through its purchases. By January 2021, after building out and patenting its technology, Charm had started to inject oil into an injection well. By March, Stripe’s order was complete. This month, Charm announced that it had finished sequestering another 1,000 tons of CO2 for Shopify, which now plans to pay for another 3,000 tons. Microsoft, which has stated its goal of achieving negative emissions by the end of the decade, is another customer.
The process is less expensive than direct air capture, another process than can be used to permanently capture emissions. (So far, Charm says it has already sequestered more CO2 than the entire direct air capture industry, though larger direct air capture plants are opening now.) It’s still very expensive, at $600 per ton of sequestered carbon; some forest offsets cost $50 per ton or even less. But Reinhardt argues that the real cost of traditional offsets is higher. Research from Oxford; the University of California, Berkeley; and CarbonPlan found that 85% of offsets sold now aren’t providing additional benefit, and 82% of the rest cause leakage, meaning that emissions might drop in one place but then just shift to another.
“If you multiply that through, what sells today as a $10 or $20 offset is actually like a $400 to $800 offset,” Reinhardt explains. “Now, there are some other co-benefits, and those are important, but on a strict per-ton-of-CO2 basis, it’s actually not that different once you account for all the leakage and additionality issues,” he says.
Over the long term, as Charm Industrial scales up, the company aims to bring the cost of its offsets down to $50 per ton. “These first tons are delivered by [machines that are] artisanal, manufactured in San Francisco by talented engineers,” Reinhardt says. “A big portion of the cost is . . . building such a machine. That comes down over time.”
To avoid the worst impacts from climate change, carbon removal is critical—as the world shifts to renewable energy, electric cars, and other solutions to shrink CO2 emissions, technologies like Charm’s can help offset emissions that are harder to eliminate quickly. Scenarios from the Intergovernmental Panel on Climate Change suggest that we’ll need between 5 and 20 gigatons of carbon removal a year in the coming decades. That would involve a huge number of machines from a company like Charm.
“I think we can do it, but it’s going to take an enormous amount of effort and an enormous amount of political willpower to get it done,” Reinhardt says. If the carbon removal industry can grow even faster, it could help reduce the concentration of CO2 in the atmosphere, not just balance out new emissions.