Mark Lewis: The Past, Present and Future of Carbon Sequestration

It’s simple: the amount of carbon dioxide present in our atmosphere is far too high, and trending in a bad direction. While the sweet spot for millions of years on planet Earth was roughly 280 parts per million (ppm), we’re currently sitting at a whopping 420 ppm. 

For obvious reasons, this is not good.

Over the past decade, we’ve seen the first good-faith and large-scale efforts by a number of global superpowers to address this issue. The 2022 Inflation Reduction Act has allocated billions of taxpayer dollars to decreasing carbon emissions in the U.S, and will go a long way toward encouraging other countries to reduce their carbon footprints. But, even if we were able to switch the entire world’s power grid to renewable energy tomorrow, we’d still have the problem of being more than 100 ppm above normal levels. 

To ensure a climate future that is as good as our past, we need to continue to develop incentives and programs that will actively remove carbon from the atmosphere.

That’s why Trailhead Capital sees such a compelling future in carbon sequestration. But in order for carbon removal to become a de facto reality, we need to make it financially sustainable for everyone.

Where the Money is Now

Last year, some of the biggest tech firms in the world announced a new program to encourage carbon sequestration and make the money make sense. Stripe, Alphabet, Meta, Shopify, and McKinsey banded together to purchase captured carbon at higher than current rates in an effort to speed adoption. With a total commitment of $925 million to pay companies and individuals for their carbon between now and 2030, these giants hope to jumpstart the carbon sequestration market. In the first year of the program their new initiative, Frontier, offered a bounty of $500 per ton of carbon removed from the atmosphere and safely stored in the soil or oceans.

While this is certainly one step in the process of decarbonizing our planet, other companies are taking a parallel approach.

As of 2022, roughly 60% of Fortune 500 companies had made some kind of net zero carbon pledge, promising carbon neutrality at a range of future dates from 2030 up to 2050. However, the important part isn’t when they plan to be neutral, it’s that they’ll now be legally held to whatever commitment they have made. The Securities and Exchange Commission (SEC) recently announced that it will be enforcing commitments to carbon neutrality and other Environmental, Social, and Governance (ESG) claims that companies have made. The SEC has posited that these commitments will have powerful effects on public investment and support for these companies. Treating these claims as less than legally binding could be misleading for investors.

This action by the SEC has moved the field of carbon reduction and sequestration from the realm of philanthropic to the concrete world of financial markets. This is one of the reasons that Trailhead Capital is making a concerted effort to provide as much supply of these innovative sequestration processes as we can, to hopefully meet the future increase in demand.  We believe there will be a flight to quality in the carbon markets that will reward active and measurable carbon drawdown versus more tenuous approaches like avoided emissions from maintaining existing carbon sinks (that may or may not actually be at risk).  

Groundbreaking Sequestration Processes

Right now, we’re excited to be investing in two new companies that we believe will change the field of carbon sequestration by being more financially viable and scalable than other practices. 

Funga has developed a process to sequester carbon in growing trees. By inoculating tree saplings with beneficial mycorrhizal fungi that accelerate the rate of the tree’s growth, they’ve found that they can also improve its ability to store carbon. This process solves multiple problems for timber and lumber companies.

Funga, founded by Dr. Colin Averill, Ecologist and Climate Scientist, combines modern DNA sequencing and machine learning technology with breakthrough research on the forest microbiome. This approach allows Funga to put the right native, biodiverse communities of mycorrhizal fungi in the right place. The funding follows the launch of peer-reviewed research showing that the reintroduction of wild soil microbial biodiversity can accelerate plant growth by an average of 64% across field and greenhouse studies, in turn, accelerating carbon capture.  More here

Eion improves upon the natural process of rock weathering, in which carbon is naturally captured and stored. When water hits silicate rocks like olivine or basalt, it acidifies to create bicarbonate, which has the effect of drawing atmospheric carbon down into the earth for millenia. 

Eion has developed a process of crushing these minerals to create a product that can act similarly to the commercial farming product aglime. By crushing up the olivine, we can increase the amount of surface area on the rock that is available for the carbon sequestration process to naturally occur. Eion’s product has the benefits of aglime with the added bonus that farming operations will be able to share in the carbon removal credits on top of whatever they’re making from the crop. What’s even more impressive is that Eion’s product will be offered at roughly the same price as commercial grade aglime, making it an easy decision for farmers everywhere. More here

Trailhead believes that these two companies alone could remove many gigatons of carbon from the atmosphere while providing agronomic benefit to land stewards and without requiring a major practice change in their operations. If that future comes to pass, these could be two major financial, social, and ecological success stories for our portfolio and our society. They also have the potential to improve biodiversity and water holding capacity in the soil, which are arguably as important as the carbon benefit.  

Please let us know if you discover additional companies building similarly important and exciting technologies to solve problems related to carbon, water, biodiversity, soil, and human health.  And please help us in welcoming Funga and Eion to the Trailhead ecosystem!