Silicon Valley Is Betting on Carbon Capture. Meet the Company Leading The Race

Over the past few years, many of Silicon Valley’s venture capitalists, tech executives, startup founders, software engineers, and idle rich folks have started to wake up and smell the climate disaster, manifested in a campfire scent of burning redwoods. Policy debates and international negotiations weren’t their forte, though. Neither was the real estate game of renewable energy development; nor was it marching in the streets or throwing food at art. What the Bay Area engineering and investment complex is good at is making new thingamajigs—app-based ride hailing or wifi-enabled smart juicers—and then scaling them up with loads of VC cash and marketing hype until they either change the world or flash back out of existence.

It happened though, that there was a new area of climate action well-suited to Silicon Valley’s interests. Decades of delay in cutting emissions had painted humanity into a corner. More and more scientists were saying that wrenching the world back onto a livable emissions trajectory would no longer just require halting carbon pollution, but also involve somehow finding a way to remove billions of tons of emissions from the atmosphere in the decades ahead.

Technologists seized on that imperative, with venture capitalists pouring money into startups attempting everything from sucking carbon out of the air with enormous fans to sinking carbon-rich biomass into the deep ocean. Currently, those projects are only able to remove negligible amounts of carbon from the atmosphere—they would have to scale up to an almost unimaginable size to make a difference in the world’s emissions trajectory. The largest, though, judging by the amount of carbon they’ve managed to sequester, is a San Francisco-based company called Charm Industrial.

Founded in 2018, Charm specializes in gathering up leftover corn stalks and other unwanted biomass. Then it heats up the waste until it turns into a slurry in a process called pyrolysis, and pumps the “bio-oil” down into abandoned oil wells, where the company says it will remain for more than 10,000 years. The bio-oil contains a high carbon concentration, which the plants originally pulled out of the atmosphere as they grew, and which would have been released back into the atmosphere had they been left to decompose. In the three years since Charm began this process in 2020, the company says it has sequestered about 6,400 tons of carbon, selling the service as carbon offsets.

The achievement, and the pace of their scale up, has come with tangible rewards. In May, Frontier—a group representing companies including Meta and Stripe that want to buy offsets from new carbon removal projects—signed a $53 million agreement with Charm. Under the deal, Charm says it will remove 112,000 tons of carbon dioxide from the atmosphere by 2030. J.P. Morgan also agreed in May to purchase more than 28,000 tons worth of carbon removals from Charm. In June, investors poured $100 million into the company.

“We’ve got the early lead in delivery and now in customer contracts as well,” Peter Reinhardt, Charm’s CEO and co-founder, told TIME after the funding round. “Going forward now [the task] is basically scaling up to meet demand. That means additional injection wells. It means building up more pyrolysis capacity, [and] hiring and training more operators. All of that good stuff.”

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There are plenty of people with questions about the sort of promises many carbon removal advocates are making. They doubt, for instance, whether engineering and energy-intensive carbon-negative projects could ever scale up to an extent that would make a difference. There are also questions about Charm’s approach in particular: whether being fast out of the gate necessarily means that bio-oil sequestration can grow enough to make a dent in global emissions—or even to form the basis of a profitable business. The answer will determine whether Reinhardt will come to be regarded as perhaps the shrewdest of a new generation of carbon-negative businesspeople, or just another climate tech tourist who made the mistake of wandering out of the world of software.

Reinhardt, 34, has a classic Silicon Valley story. Back in 2011, he and two friends, Ilya Volodarksy and Calvin French-Owen, dropped out of their junior year at MIT to start a software company. Their original idea was a website that would help instructors see if students were following their lectures in real time. They got off to a brisk start, raising about $800,000 in seed funding. But then the idea flopped. They redirected their energy to another idea for business analytics software, which also failed. With two months’ worth of cash left to run their servers, they gave their entrepreneurial dreams one last shot and hit on an idea for software to help companies track consumer data, which turned into a very lucrative company called Segment. Reinhardt, almost by default, started running things as CEO. “He was like, ‘Is this going to make money? How do we talk to investors?’ The big adult questions,” Volodarksy says.

But Reinhardt, a former math wiz from a lower middle-class family in Pullman, Wash. and aerospace engineering student at MIT, was never quite satisfied with the life of an extremely successful tech executive. “My goals were basically to get a trial-by-fire MBA—I got more than what I bargained for there, which was awesome,” Reinhardt says. “I loved the people on the team, but I did not find software itself to be rewarding.” Reinhardt’s personal blog at the time gives some sense of the range of interests that caught his eye. Some of his articles focus on lessons from running the company. Others talk about airplane-dirigible hybrids, thorium reactors, potential self-driving car market dynamics, and his frustration with crappy email search. One very funny article from January 2012 calculates the shortest possible time in which you could cross the U.S. on a theoretical maglev train without killing yourself from the g-force. (Answer: seven minutes, at 17 g’s.)

In 2015, Reinhardt started buying shares in projects purporting to protect forests in Indonesia and Brazil from being cut down, a common practice among companies looking to counterbalance the emissions from offices, flights, and servers. But as he looked deeper into how these offsets really worked, he became concerned. “I was trying to understand what exactly was physically happening in the world as a result of our money. That became very, very murky,” Reinhardt says. “My conclusion was [that] this is either incompetent, or fraud, or somewhere on [that] spectrum.”

Reinhardt started penciling out new approaches in his off time, toying with ideas for carbon-negative industrial processes. In 2018, he founded Charm with Kelly Kinetic, a mechanical engineer, and her partner Shaun Kinetic, an electrical engineer, both of whom had been co-workers with Reinhardt’s wife at Planet Labs, a satellite imagery company. The couple served as CTO and chief scientist, respectively, while Reinhardt was CEO. Together, the trio landed on an ambitious idea to use biomass to make carbon-negative iron.

Segment, meanwhile, had grown into a tech heavyweight, tracking customer data for companies like IBM, and in 2020 it was acquired by Twilio, a web communications company, for $3.2 billion (Reinhardt stayed on to work as a Twilio executive). Things started heating up at Charm, too—en route to proving out the iron-making idea, Shaun Kinetic proposed they also start sequestering carbon by pumping bio-oil into abandoned oil wells. The idea had only been around a few weeks when Stripe bought 416 tons of CO2 removals, which Charm delivered the next year. A few months after that, in January 2022, Reinhardt left his job at Twilio, joining Charm full-time. (Shaun and Kelly Kinetic left Charm the following year. Reinhardt declined to discuss the reasons for the departure. TIME was unable to reach Kelly and Shaun for comment.)

Bigger investments and carbon removal purchases started rolling in. With money in hand, one of Reinhardt’s top objectives now is to build a fleet of 10 pyrolyzers, essentially mobile ovens that convert biomass into bio-oil (currently they have one such machine—most of the bio-oil the company has sequestered to-date was purchased from third-party suppliers). With the right government policies, huge scale, and added revenue from carbon-negative ironmaking, Reinhardt projects that his company could eventually get costs down well below $100 per ton of sequestered carbon, generally considered to be a target point that makes large-scale carbon dioxide removal realistic.

“Peter pushes his team to move fast,” says Nan Ransohoff, head of climate at Stripe and head of Frontier, which she helped found in April 2022. “The combination of speed and rigor that the Charm team moves with is very impressive, and in our minds has helped set the bar for what ‘great’ looks like in the field.”

Gene Berdichevsky, co-founder of battery manufacturer Sila Nanotechnologies, is a friend of Reinhardt’s (their two companies do not have a business relationship). He says he wasn’t convinced by Reinhardt’s bio-oil approach at first, but was won over by the younger executive’s rigor and effectiveness. “I’ve never met anyone else who came from software [who was] anywhere close to learning this quickly and being on this kind of trajectory,” Berdichevsky says. He regards Reinhardt as among the top five best energy entrepreneurs he’s ever met—measured-sounding praise were it not for Berdichevsky having folks like Elon Musk and JB Straubel in his rolodex.

But for all the praise, there are also those with doubts. Concerns focus principally on the question of whether the bio-oil sequestration concept can feasibly be carried out at the hundred million-ton scale Reinhardt says is possible, and at low enough prices to make the approach feasible. To some extent, it’s a criticism that could be applied to much of the field of carbon removal; no one knows for certain if any of the ideas on the table can scale to the degree necessary to pull CO2 out of the air at a rate that could make a real dent in the global climate crisis. That enormous gulf between what’s being done today and what would have to be achieved in the next two or three decades is a large part of the reason some climate folks say that even talking about carbon removal is a waste of time. It only gives false hope, they say, and takes oxygen from the far more dire imperative of immediately and substantially cutting emissions.

Jim McDermott, managing director at Rusheen Capital and an investor in other carbon removal companies, passed on one of Charm’s funding rounds. It’s not that the current idea didn’t physically work, he says. But he disagreed with the company’s assumptions about its ability to cut costs as it scaled up. “When Silicon Valley guys coming out of software start telling me stories about mass energy balances and things of that nature, I’m naturally deeply skeptical,” McDermott says.

With Charm’s process specifically, critics say that transporting bio-oil to centralized locations for injection would be expensive, as would be the fact that biomass like corn stalks is plentiful at some times of the year, and absent in others, which translates to extra cost as the company’s expensive equipment sits idle. There’s also the question of whether Charm will even be able to get its hands on enough corn stalks, peanut shells, sawdust, or other leftover biomass to feed into its pyrolyzers. Right now, most of the cost of leftover corn stalks is just paying to gather them up. But that biomass is also useful for making zero-carbon fuels, and as industries like airlines and shipping attempt to decarbonize, there could be increasing competition for them, driving prices up.

Some experts, though, say there’s no reason to cast aspersions on potential solutions, even if they might only end up having a tiny impact on the climate. “If you’re a small-scale solution that’s not contributing more greenhouse gas pollution than you’re eliminating, then you are just part of… the diversified portfolio that we need to address climate change,” says Lauren Gifford, associate director of the Soil Carbon Solutions Center at Colorado State University.

A skeptic, however, might say that if you’re going to hype a carbon-capture technology, you had better at least be reasonably sure that it will work on a scale that really matters. That seems to be a bit of the thinking behind Frontier’s approach to the projects it supports. The coalition has corralled corporate players into paying enormous prices, $600 per ton, compared to typical carbon offsetting schemes—projects that purport to protect threatened forests or distribute high-efficiency cookstoves, for instance—which run in the range of $16 per ton of avoided emissions.

Frontier’s high prices are meant to jump start an industry of more permanent, measurable carbon removal compared to the offsetting schemes that have raised questions in some cases about whether they deliver much benefit at all. The collective only works with carbon removal companies it believes have the potential to cut their price down to around $100 per ton, and massively scale up to at least half a billion tons of carbon per year in the decades ahead—an amount at the right order of magnitude to help address the potential future need for negative emissions to halt the worst effects of climate change. Charm, they say, falls in this category. “The spirit of it is we are looking for solutions that really do have the potential to get to climate-relevant scale,” Ransohoff says.

Ransohoff notes, however, that part of that means supporting companies that can remove carbon in the near term, even if in much smaller amounts compared to the scale required to make a difference in the climate. “We have to balance long-term goals as well as making this field more real today,” Ransohoff says. “Peter [Reinhardt] does a really good job of this. Carbon removal can feel very amorphous to people. As soon as you can make something real—there’s a facility to tour, there’s something to see—it makes the whole field feel less imaginary.”

An executive at a Charm competitor, who asked not to be identified in order to speak candidly, puts things more bluntly: everyone knows that Charm won’t scale up, but ideas that have better chances for long-term success will take years to build out. Charm, however, can help companies buying offsets through Frontier bank some legit removals now.

David Keith, director of the climate systems engineering initiative at the University of Chicago, did some of the early research on using biomass for carbon sequestration back in the mid-2000s. He’s also the founder of carbon removal company Carbon Engineering. He doesn’t think Charm’s economics will ever pencil out at realistic prices. “I think people tend to assume that if rich, smart people invest in something, there must be a reason. But I can tell you from experience, it just isn’t true.”

“Being scale-limited is not in itself a valid criticism,” Keith adds over email. “But if it is expensive and funded by selling [a] dream that it will be gigantic and eventually cheap, then it will not likely make a positive contribution.”

Reinhardt smiles when I bring up questions about scaling up. “What do they say about experts? You should believe experts when they tell you it can work, and shouldn’t when they tell you it can’t,” he says. Then he launches into his explanation of the assumptions that underpin his cost projections. Just staffing his pyrolyzing machine, for instance, accounts for more than $300 per ton in cost—with 10 pyrolizers operating at once, he says that cost will fall to closer to $100 per ton, and continue to shrink from there.

As for the cost of transporting bio-oil, Reinhardt says he plans to have a network of empty oil wells spaced every 50 miles or so, meaning his carbon wouldn’t have to travel very far. To the problem of pyrolizers sitting idle several months out of the year, he says he’s already factored that into his models, and that the machinery is getting cheap enough that leaving it idle isn’t such a big deal. On the point about a looming scramble for biomass, meanwhile, he is not terribly concerned. “It’s an interesting academic exercise,” he says. “The reality on the ground is that no one is using this biomass today.”

That focus on the “right now” aspect of negative carbon has a lot to do with the divide over how observers see Charm. Perhaps it is true that Reinhardt is selling an imperfect solution. But the fact is that when folks with money started saying they would pay to put carbon in the ground, it was Charm that was able to provide more of that service, and faster, than anyone else. Among the Silicon Valley set, that speed counts for a lot.

“Rather than sort of spending half a decade developing technology, he’s been delivering from basically day one,” Berdichevsky says. “He’s remarkable in proving out the demand for a product that he has not finished building yet.”

Correction, Nov. 1

The original version of this story misstated Frontier’s role in emissions contracts. Frontier does not make purchases, but rather facilitates purchases on behalf of other companies.