Bank to pay $20M to grab carbon

JPMorgan Chase has made one of the largest single corporate purchases to pull carbon from the air: The bank will pay Swiss startup Climeworks $20 million for removal services, JPMorgan announced.

Founded in 2009, Climeworks is one of the earliest companies to pursue direct air capture, a technology that aims to remove carbon dioxide from the atmosphere and store it permanently. The company opened its first plant in Iceland in 2021, completed its first removal this year and is building its second plant in Iceland.

Though it’s a relatively small investment from JPMorgan, the injection of cash will help Climeworks scale up its services. Early corporate buyers help the company reduce the financial risk of project development as well as secure additional buyers, Climeworks said in a statement.

Scientists estimate that the world may need to remove billions of tons of CO2 from the atmosphere annually by mid-century to limit global warming. The JPMorgan deal will cover about 27,500 tons of CO2 removal over the course of nine years, according to a Climeworks spokesperson, who did not provide details on when the startup would begin removals for the bank.

Climeworks and other direct air capture startups still have a number of hurdles to overcome before they play a meaningful role in pulling planet-warming pollution out of the atmosphere. Chief among them is the high price buyers must pay for their services. The JPMorgan purchase averages about $800 per ton of removal, while most experts see $100 per ton as a target for direct air capture — or any other form of carbon removal — to be economically viable. Direct air capture is also energy-intensive and could compete with other industries for clean electricity.

This isn’t the first investment JPMorgan has made in carbon removal. The financial services firm also recently joined Frontier, a public benefit corporation led by payment company Stripe that is pooling funding from large corporate buyers to jump-start the carbon removal industry. This deal is separate and additional to the funds that JPMorgan has contributed to Frontier, a Climeworks spokesperson said.

“To complement our operational emissions reduction efforts, we’re collaborating with companies like Climeworks to address our unabated emissions today and, crucially, to support the development of scalable solutions that the world needs to achieve netzero emissions by 2050,” Brian DiMarino, JPMorgan’s head of operational sustainability, said in a statement.

The bank is part of an alliance of banks pledging to reach net zero by 2050 and has recently made substantial investments in renewables, according to a BloombergNEF analysis.

The amount the bank will spend on the carbon removal deal is dwarfed by the amount it has used to finance fossil fuel projects. Between 2016 and 2022, JPMorgan spent more than $400 billion lending to and underwriting the fossil fuel sector, according to an annual report tracking banks put together by a group of NGOs led by the Rainforest Alliance. The report found that made the bank the largest fossil fuel financier in the world over that time period, though JPMorgan’s lending to fossil fuel companies fell 42% last year.