Big tech and others are using an advance market commitment strategy to accelerate development of carbon removal technologies and combat climate change.

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The first advance market commitment (AMC) launched in 2007, with the Bill & Melinda Gates Foundation, along with five countries, committing $1.5bn to urge development of a vaccine for pneumococcal disease. The idea was to create a market for the vaccine that was viable enough for biotech and pharmaceutical firms to invest in developing and producing it. Thus far the AMC is proving successful. Now similar programmes are rolling out to accelerate innovation in cleantech.

In April a consortium comprised of four Silicon Valley tech firms, namely Alphabet, Meta, Shopify and Stripe, as well as the sustainability practice of McKinsey, announced the Frontier Fund, an AMC which “aims to accelerate the development of carbon removal technologies by guaranteeing future demand for them,” according to Frontier’s website. The $925m fund follows a similar blueprint to the original AMC, creating a market by agreeing to purchase successful technologies.

The Frontier Fund’s agreement is contingent on the technology meeting specific criteria used to measure its success—defined as “permanent carbon removal solutions that have the potential to be low-cost and high-volume in the future”. Permanence is indeed at the top of the list: The tech must be able to store carbon for at least 1,000 years. Second, its physical footprint cannot threaten food security. Thirdly, the cost must be feasible, with a target price of less than $100 per tonne of carbon removed.

Frontier is led by Nan Ransohoff, Head of Climate at Stripe, which will contribute more than a quarter of the fund. She says that the goal is not to invest in carbon tech startups. Rather, as The Economist reports, its purpose is to be early customers for nascent carbon removal techniques. The fund will offer low-volume pre-purchase agreements to early-stage cleantech startups. Bigger firms will be able to bid on larger contracts that will help them secure the funding to scale up existing methods.

Several other initiatives are employing a similar strategy, i.e. championing sustainability by generating demand for decarbonisation technologies. This is a primary goal of the First Movers Coalition, led by the World Economic Forum (WEF) and U.S. Special Presidential Envoy for Climate John Kerry. Its approach includes defining purchase commitments for technologies with particular focus on hard-to-abate sectors such as aviation, shipping, trucking and steel.

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