Charm gets $53 million to turn corn residue into oil and inject it into abandoned oil and gas wells

The public benefit company Frontier, which has secured more than $1 billion in commitments from its member companies to remove carbon dioxide from the atmosphere, on Thursday announced its first deal with a carbon removal company: Charm Industrial.

Charm will remove 112,000 tons of carbon dioxide between 2024 and 2030 in exchange for a $53 million payment on behalf of Frontier member companies: Alphabet, Autodesk, McKinsey Sustainability, Meta, H&M Group, Shopify and Workday. In addition to Frontier’s member companies, Aledade, Boom Supersonic, Canva, SKIMS, Wise, and Zendesk have committed to carbon removal purchases with Frontier through a partnership with Watershed, a carbon accounting firm.

To do this, Charm will convert excess organic matter—such as corn stover, which is the stalks, leaves, and cobs that remain in fields after harvesting corn, and that might otherwise decompose and release carbon dioxide into the air—into bio-oil and then put that oil into the ground in oil wells. abandoned.

Prior to Thursday’s announcement, Frontier, which is owned by payment processor Stripe, spent $5.6 million to purchase nearly 9,000 tons of contract decarbonization from early-stage decarbonization startups tracking a handful of technologies. That money went to the startups via advance purchase agreements, relatively small checks often for $500,000, delivered up front, not contingent on delivery, in an effort to spur growth in an industry that itself is still nascent.

The $53 million contract with Charm is different because it is significantly larger than previous agreements, and because it is the first purchase agreement Frontier has signed, a legally binding contract that is payable on delivery of carbon removal and sequestration tons. The 112,000 tons of carbon dioxide that Charm will remove is more than ten times the total amount of carbon dioxide removed so far with human technologies. It has already removed 6,160 tons.

Frontier chose Charm as their first large-scale carbon removal company because of Charm’s ability to deliver results.

“Over the past two years the field has grown very quickly and has gotten a lot of attention, but in the end, decarbonization is still in its infancy,” Frontier president Nan Ranshof told CNBC. “Charm went from concept to actually delivering thousands of tons in less than three years. I hope we’ll see more carbon removal companies down this path.”

While Charm’s progression is a positive step, it’s still a metaphorical drop in the bucket. In 2022, carbon dioxide emissions related to power generation will be N.D 36.8 gigatonnes (one gigaton equals one billion tons), according to a March report from the International Energy Agency. Limiting warming to 1.5°C, the target set by the Paris climate agreement, would require removing 6 gigatonnes of carbon dioxide annually by 2050, according to the McKinsey Report 2022, which locates the Intergovernmental Panel on Climate Change.

Charm CEO Peter Reinhardt took an interest in carbon-first removal technology as a frustrated customer.

Reinhardt dropped out of MIT’s aerospace engineering program in 2011 to start Segment, a customer data platform. He expanded the company to more than 600 people and several hundred million in revenue before selling it to Twilio for $3.2 billion.

Around 2015, Reinhardt began seeking Segment emissions offsets.

“Originally, my motivation was to do the right thing for the environment and to be able to represent that to employees and customers that we take responsibility for our energy consumption and emissions,” Reinhardt told CNBC.

He bought forest offsets to protect the rainforests of Indonesia and the Amazon, but the more he looked at the money he was spending, the less convinced he was that the offsets were doing much of anything to permanently sequester carbon emissions.

“Why aren’t trees being cut down in the immediate area? How is that actually preventing trees from being cut down? It’s not clear,” Reinhardt told CNBC.

Permanence checking was also an issue. “It sounds good to appropriate the forest, or even to reseed the forest, but when you get down to the brass tacks about how you can actually be confident that carbon will stay out of the atmosphere, it just stops working,” said Reinhardt.

Around 2018, Reinhart started talking with friends about how to permanently sequester carbon dioxide.

Meanwhile, Charm co-founder and chief scientist Sean Meehan discovered carbon sequestration technology almost by accident. Meehan was trying to use biological waste as a fuel for industrial processes such as iron making, and he converted the waste into bio-oil through rapid heating. When the plan failed, Meehan had to dump the bio-oil, and one solution he found was to put it in a deep geological well.

Then, Meehan realized that dumping the bio-oil into a deep well would permanently sequester all the carbon in the organic matter that goes into making the bio-oil, so it would never escape into the atmosphere as carbon dioxide.

“It’s a great discovery, but it’s accidental,” Reinhardt told CNBC.

In less than a year, in 10 months, Charm completed its first carbon removal injection.

In May 2020, Stripe purchased 416 tons of carbon removal from Charm – its first customer. Charm decarbonized in April 2021, a year before launching its Frontier collective in April 2022 with $925 million in advanced market commitments.

Pumping vital oil underground may seem like an odd feat.

“It’s weird or unusual, but uniquely American, in that we’re basically pumping barbecue sauce into old oil and gas wells,” Reinhardt told CNBC.

Charm doesn’t exactly pump fully cooked barbecue sauce—with tomato sauce, vinegar, and spices—into gas wells, but it does pump something very similar to liquid smoke, which gives the barbecue sauce a smoky flavor. Liquid smoke is made by placing wood chips in a pyrolyser, which heats the materials to superheated temperatures in a vacuum.

That’s what Charm does, but instead of wood chips, it uses corn residue and “fuel load reduction waste,” brush and debris collected from forests to prevent and control fires.

If you were to burn all that organic matter with fire, almost all of the carbon in the organic matter would be converted to carbon dioxide (combines with the oxygen in the air) and released into the atmosphere. If organic matter on Earth were left to decompose, the vast majority of carbon would have returned to the atmosphere by the second or third year. Even in a no-till situation, “which is kind of the best case,” Reinhardt told CNBC, the amount of carbon that ends up in the soil is minuscule.

Instead, Charm takes the organic matter, puts it in a thermal analyzer, which is about the size of a refrigerator and can be carried from one place to another on the back of a truck. This refrigerant heats the biomass to about 550 degrees Celsius, or 1,022 degrees Fahrenheit, creating a fume gas. Imagine splashing water on a frying pan and gone pffsst And it kind of evaporates into a vapor. “We basically do this with cellulose,” Reinhardt told CNBC.

In the end, 20% of the output is carbon dioxide, 30% is coal (which can be used as a soil additive), and 40% to 50% is biooil, Reinhardt says. This oil is injected deep into the earth’s surface into abandoned oil and gas wells for permanent storage.

To be eligible to participate with Frontier, all decarbonization projects must meet specific criteria including permanence (more than 1,000 years), cost (with a viable pathway to cost less than $100 per ton at scale), and incremental (meaning they are not CO2 removal that could have been removed or reduced by another method anyway), and capacity (more than 0.5 gigatonnes of carbon per year on a large scale).

There are about two million abandoned oil and gas wells in the United States, Reinhardt told CNBC, and the owner-operators are eager to find another use for them.

“The subsurface volume is staggeringly large,” Reinhardt told CNBC. “You will run out of waste biomass long before the subsurface capacity is exhausted.”

Currently, Charm sells and delivers carbon removal at about $600 a ton.

Charm’s deal with Frontier includes a 37% per-ton price drop between 2024 and 2030 as Charm is able to scale up operations. Frontier hopes per ton prices will drop by 75% if some government stimulus is realized.

The goal is to scale quickly and cheaply.

“We think that in the long term, bio-oil sequestration could be a cheaper – or closer to cheaper – way to permanently remove carbon from the atmosphere and quite scalable, so we think it could originate in the several billion tons per year,” Reinhardt said.