Europe must not miss the opportunity to become the global leader in carbon removals, according to John Collison, founder of US-Irish payments behemoth Stripe.
Speaking at the Sifted Summit on Wednesday, Collison said that unlike the US, Europe has a robust regulatory framework and is home to the bulk of deeptech talent.
“There’s so much political energy and ramped up support for climate tech to be a big deal,” Collison says, in conversation with government AI advisor and Entrepreneur First founder Matt Clifford. “The new opportunity for Europe should be climate tech.”
Stripe launched an initiative called Frontier Fund in 2022, which has backing from tech giants Alphabet, Shopify and Meta, consultants McKinsey, a number of international banks and smaller Stripe customers. It plans to invest $1bn in carbon removal tech between 2022 and 2030.
“We need to suck carbon out of the atmosphere — we need to do a bit of hoovering up, kind of like the post-Glastonbury cleanup of the industrial age,” Collison says.
A number of the startups the fund backs will be European, says Collison.
Climate tech wouldn’t be the first time Europe has got ahead of the competition — using its ability to pull in the same direction on regulation, he adds.
“Europe has this awesome ecosystem of fintechs that doesn’t exist in the US — which has a pathwork regulatory framework.”
Europe, meanwhile, has rolled out continent-wide regulation like PSD2 (Payment Services Directive Two) and open banking, which has led to huge success in the sector, he says.
The climate tech “moral hazard”
But while Europe’s vibrant tech scene has paved the way for the region to take the lead on carbon removals, there’s one big problem, Collison says.
“No-one is buying” effective carbon removals right now, he says, because of the amount of poor quality carbon offsetting solutions on the market.
Offsetting can cost between $5-10 a tonne, and you can tell how serious companies are by how much they’re willing to pay, he adds.
“Carbon offsets are a bit of a moral hazard. They’re not a rock solid way of solving carbon emissions.”
Good quality carbon removals — like kelp that sucks carbon from the atmosphere and then gets sunk to the bottom of the ocean and carbon-absorbing sand — are “two orders of magnitude” more expensive.
“We’re in this bootstrapping problem, where because no one is buying carbon removals, it’s really expensive.”
Bringing that cost down is what Frontier Fund has set out to do by scaling the tech behind it, he adds — but it’s only one piece of the puzzle.
“We have to get carbon emissions down globally [since 1990, emissions have risen in all regions across the globe apart from Europe] and implement a carbon tax.”
“Easy”, jokes Clifford. “Tractable”, corrects Collison.