The race to serve the Carbon Removal consumer
CDR has the potential to change the relationship between individuals and climate change, and Climeworks is leading the pack
You’re reading Terraform Now, a newsletter on the business of carbon removal. To support my work, you can subscribe here or share this article with interested folks:
The best consumer products help people tell a more coherent story about their lives. Climate-conscious consumers are looking for products that allow them to live in a modern consumerist world — renting an apartment, driving a car, eating meat, etc — while also limiting their carbon footprint. They want products that help them feel like they are doing as much good as possible.
The idea that people would give away their money just to feel good might seem rosy, but keep in mind that ~$400B is given to charity every year in the US alone. Fully ~$320B comes from individuals. To put that in perspective, a carbon removal company that captured 5-10% of the US charity market would be a Netflix-sized company.
Climate concious consumers have bad options
Here’s a non-exhaustive list of products that climate influencers say you should consume (or not consume) if you’re interested in ‘saving the planet.’ These are all bad options — some are expensive, while others require sacrificing meaningful experiences or changing cherished habits. It’s worth comparing all of these to carbon removal, at the bottom of the table.
Carbon removal looks very attractive, at least relative to other options consumers have. And that word ‘relative’ is crucial. People do not buy products in a vacuum. They buy them relative to substitutes, and paying for carbon removal will be a substitute for buying an electric car or eating vegan.
One of the nice things about buying from carbon removal companies is that you can decide how much you are willing to contribute. A student? Don’t worry about it. Just starting your career? How about $5 per month. Successful in middle age? Consider it a utility and shell out $100+ per month. This ‘level of consumption’ choice is very different from every other climate-friendly product.
Offsets will go to businesses. So what will consumer buy?
You’ll notice I’ve steered clear of the term ‘carbon removal offsets1’ when talking about consumers. That’s because individual consumers are not well-positioned to buy offsets. Only large companies like Microsoft2 have the resources to verify that CO2 is actually being captured and put into the ground. And these businesses are snapping up the supply of high-quality offsets. There is simply not enough to go around.
This is especially true for high-quality offsets like Direct Air Capture (DAC) and Biochar, both of which verifiably remove CO2 from the atmosphere. This makes sense — businesses should either buy high-quality offsets or none at all, because buying low-quality offsets opens buyers up to criticisms of greenwashing. That’s why we’ve seen three indicators of quality — permanence, verification and transparency — move to the top the list for large CDR buyers:
All of this means that high-quality DAC and Biochar offsets are going to continue to be snapped up by big corporate buyers.
High demand — and high prices — from corporate buyers is good news for carbon dioxide removal (CDR) companies. Most CDR companies have very small marketing departments, so they focus on developing a single channel. Businesses are the obvious bet for small marketing teams.
But a few CDR players are pivoting toward the consumer:
It’s quite astonishing that many of these companies don’t even have a place for a regular consumer to slot in their credit card information.
For those companies that do have a consumer offer, I expected that signing up would be more difficult, buried in their website. But it’s not — Carboneers, Climeworks, Frontier, and Charm have all made simple interfaces that allow consumers to buy quickly.
Who’s winning the race in 2024?
Of the companies competing for the consumer, I think Climeworks and to a lesser extent Frontier in the lead. They have done a few things better than their competitors:
(1) Both allow flexible purchases — I currently give $8 per month to Climeworks, which is too low for the minimum contribution allowed by Charm or Carboneers.
(2) Climeworks quantifies clearly what you are giving in terms of the amount of CO2 adult trees remove
(3) Climeworks also builds a long-term relationship with a regular cadence of emails with updates on Climework’s progress and industry news
Climeworks claims to have 20,000+ individuals who are ‘Pioneers,’ meaning they buy on a monthly basis. Neither Charm nor Carboneers have published how many consumer buyers they have, which suggests that Climeworks has a significant lead here.
Having a larger buying pool does not just mean revenue in 2024. This distribution list will allow Climeworks to do more email marketing as the years go on. Email is the most affordable customer acquisition channel, and having a big email list of bought-in consumers will give Climeworks an advantage regardless of how their technology progresses. It allows them to experiment with different approaches to upsell and reaching new consumers through their existing network.
Climeworks seems to understand something others are not seeing — it is not about harvesting $25 per month from each consumers today. It’s about creating a large and thriving community of people who trust Climeworks with small amounts of money for many years. Many of these people will eventually graduate into larger recurring purchases. Some might be willing to buy non-DAC products from Climeworks, giving Climeworks product flexibility in the future.3
This is why it’s urgent for every CDR company to put out a minimum viable product for consumers as soon as possible. The only way to figure out what consumers want is to start interacting with them.
So why are these companies hesitating? It’s clear that CDR companies, including Climeworks and Frontier, don’t know exactly what they are selling. Everyone is so steeped in the language of carbon credits that they are struggling to think creatively about how the consumer product should be different.
The path forward
Having just written glowingly about Climeworks’ consumer web-flow, I must now say that there are huge gaps in their consumer offering. The ideal product would do much more. It would fill the emotional needs of climate-conscious consumers, give them something more tangible to relieve their climate anxiety. It would increase trust by giving those of us with a stake in Climeworks exclusive information about progress — think videos of plant construction, interviews with company leaders, financial updates, etc.
Carbon removal marketers need to think differently about the consumer. Nothing about how CO2 is captured, what technology is used, or what regulatory framework is in vogue will create conditions for a winning consumer business unit. It will be a product and message built on trust, and it will be different from the ‘carbon offset’ model popular with business buyers. That message is not credible with consumers.
I’m clearly not offering real solutions here, which I recognize is not very productive. I’m not a very creative marketer. But I am excited to see how these companies bridge the gap between charitable giving and productized sales.
The company that figures out a way to serve the climate-conscious consumer has a multi-billion dollar prize waiting for them.
Or credits
A consortia of large buyers like Frontier will likely also have the resources to verify removal
Climeworks uses a technology called Direct Air Capture to remove CO2 from the atmosphere. Here I’m suggesting that Climeworks could become a buyer and seller of non-DAC offsets like BioChar. That would allow them to compete not just with DAC players, but carbon removal platforms like Frontier. This is not a reccomendation, but it is a strategic option that Climeworks is surely considering
I had not thought of this direction before.
As to apps, an interesting concept one of my clients introduced me to was a replacement for the usual "MVP" for a new offering. Instead they talk about the MLP - minimum lovable product. Kitschy as it might sound, it is a great design principle.