JPMorgan Chase & Co. has made a $200 million commitment to pull carbon from the air, and which includes a $20 million purchase from Swiss startup Climeworks for removal services, one of the largest corporate deals for removal services.
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 currently 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 Climeworks reduce the financial risk of project development as well as secure additional buyers, the company said in a statement.
A spokesperson for the startup did not provide details on when it would begin removals for the bank.
In addition to Climeworks, JPMorgan has also purchased 28,500 tons of removal services over five years from Charm Industrial, a California-based startup that uses bio-oil to store carbon, and signed a memorandum of understanding with CO280 Solutions to pull up to 450,000 tons of CO2 from the atmosphere over 15 years.
The bank wouldn’t disclose the value of those deals. 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.
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 that buyers currently must pay for their services.
The Climeworks purchase averages about $800 per ton of removal, while most experts see $100 per ton as a target for DAC — or any other form of carbon removal — to be economically viable. DAC is also energy-intensive and could compete with other industries for clean electricity.
These aren’t the first investments 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 jumpstart the carbon removal industry.
In its announcement this week, the bank said it was committing $75 million to Frontier, which includes $50 million for its own operational emissions and $25 million to help clients meet their own climate targets. All told, JPMorgan said its investments will cover 800,000 tons of carbon removal services and allow the bank to match every ton of its unabated direct operational emissions by 2030.
“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 net-zero 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. Still, the amount that 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 $430 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 Action Network. The report found that 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.
By Michelle Ma / Bloomberg