Feb 29, 2024 · 44m · catalyst
The challenges of building a carbon removal portfolio
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of Catalyst, host Shail Khan interviews Shopify's Head of Sustainability, Stacey Kauk, to examine the practical operational, financial, and technological hurdles of building a durable carbon dioxide removal portfolio. Together, they analyze off-take contracting, technology pathways, MRV bottlenecks, and the structural market mechanisms needed to scale the carbon removal industry.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Shayle holds 31.2% of the talking time here. How this is scored →
Shayle as informed peer 5.5 Guest teaching 3.5 Guest disagreement 1.5 Shayle pushing back 2.0
speaking balance: gold is Shayle, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 27:44 Guest rejects commodity framing
Stacey directly dismisses Shayle's characterization of CDR as a commodity market, emphasizing that existing credits are completely non-fungible and disparate.
Hardest push from Shayle ▶ 28:00 Host insists on eventual commodity convergenceShayle challenges Stacey's dismissal by arguing that the long-term destination of the CDR market must inevitably be standardized commodity pricing.
Biggest teaching moment ▶ 37:40 Guest reframes CDR as public utilityStacey educates on the limits of venture capital in CDR, reframing carbon removal as a public waste management obligation akin to wastewater treatment.
Shayle holds their own ▶ 16:24 Host maps out DAC cost curves and scaling trade-offsShayle delivers an in-depth breakdown of engineered DAC systems, analyzing theoretical cost curves against real-world energy constraints and comparing them to passive solutions.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Shayle as informed peer | Guest teaching | Guest disagreement | Shayle pushing back | Why |
|---|---|---|---|---|---|---|
| The Emerging Carbon Removal Market Overview | 0 | 0 | 0 | 0 | Introductory monologue where the host introduces the nascent carbon dioxide removal market and introduces Stacey Kauk. Host-side scores are 0 per monologue rules. | |
| Shopify's Procurement Portfolio and Delivery Delays | 6 | 4 | 1 | 2 | The host asks targeted questions about Shopify's historical purchase volumes and delivery lag. The guest explains why early-stage CDR deliveries inevitably face multi-year delays. | |
| Evaluating CDR Categories: High-Energy DAC vs. Passive Systems | 8 | 3 | 1 | 2 | The host articulates the theoretical advantages and practical constraints of engineered DAC cost curves versus low-energy natural systems. The guest details Shopify's portfolio diversification strategy across varied technology stacks. | |
| Commercial Sponsor Break: Clean Energy Infrastructure | 7 | 5 | 4 | 5 | The guest rejects the host's premise that CDR credits currently act as a commodity due to non-fungibility. The host pushes back to argue that over a longer horizon the market must converge into a standardized commodity. | |
| Scalability Limits, Venture Capital Fit, and Public Funding | 7 | 5 | 2 | 2 | The host highlights the structural mismatch between venture capital return horizons and sub-gigaton CDR opportunities. The guest reinforces this by framing CDR as public waste management infrastructure rather than purely VC-backed software-style bets. | |
| Navigating MRV Frameworks and Embracing Pilot Failures | 5 | 4 | 1 | 1 | The discussion covers internal MRV due diligence standards and the need for the market to treat early pilot failures as scientific data rather than industry condemnation. |
Statements from this episode (17)
Shayle Kann says durable carbon removal procurements began around 2019
“The first procurements, besides some really small individual ones for some of the early, early days of DAC, but the first procurements of this kind of new emergent market that is focused on durable carbon removal really only showed up in call it 20, 2019, 20, …”
Shayle Kann says Frontier, Microsoft, and Shopify dominate durable carbon removal
“Though there is a growing buyer pool, it's really still predominantly dominated by a small number of companies that are procuring in part, not just for their own benefit, but trying to foster an ecosystem and support the development of the industry, right? So …”
Shayle Kann notes carbon removal startups surged to hundreds since 2019
“We've got hundreds of carbon removal companies now where we had, I don't know, probably a dozen or less back before all of them started.”
Shopify has purchased nearly 85,000 tons of durable carbon removal
“So we're just under 85,000 tons and that's durable carbon removal. So it doesn't include things with less than an estimated a hundred year permanence.”
Shopify received its first carbon removal deliveries from Running Tide and Climeworks
“Things have started to change in the back half of 2023 where we got our first ocean deliveries from Running Tide, and then our first DAC credit delivery from Climeworks, which is the first batch of credits we've received from them from the contract that we sig…”
Stacey Kauk says early-stage carbon removal startups take three years to deliver
“That's what we're seeing play out is, you know, it is about three years before you can get those deliveries, because when we're making those purchase decisions, often we don't have full visibility, and neither does the company.”
Stacey Kauk says natural carbon removal is cheaper due to lower energy
“For me, in terms of what's hot, what's not, I really like carbon removal that enhances natural systems, because they use less energy, which makes them more cost effective.”
Shopify has 40 carbon removal companies across multiple pathways in its portfolio
“We've got 40 companies in our portfolio now, across a multitude of pathways”
Shopify evaluates its carbon removal suppliers every six months for backups
“And so we do a health check. And we do that health check every six months. And on an annual basis, we'll identify companies that, you know, we have concerns about. And then we look at, okay, well, they're in this vertical, they're doing this technology, we pro…”
Stacey Kauk predicts carbon removal takes 30 years to become a commodity
“In order to function properly, we need to end up in a place where a ton is a ton is a ton, and there's two reasons for that. One, it, Provides that level playing field on the side of the suppliers, but it also provides a level requirement across companies or w…”
Stacey Kauk says some carbon removal startups sell credits below cost
“One, they're gonna charge the cost. Their price is equal to the cost. And then there are other companies that their price Is less than the cost, and they're taking a loss because they want to come out, and they are having, they have a different business strate…”
Stacey Kauk says carbon removal is waste management, not venture capital
“The reality is that carbon removal's in the VC world right now because there's no funding from elsewhere. And I don't see this being a long-term financing solution, because carbon removal is waste management. Like, it's just cleaning the air, like, we clean ou…”
Stacey Kauk predicts carbon removal will become a government-funded public mandate
“So in the longer term, I think this is going to be more of a public requirement Then it is going to be something that's got to achieve gigaton scale and make, you know, the ROI that the VC funds are looking for.”
Shopify relies on internal standards rather than existing registry protocols
“So when we started, we began, it was, we didn't trust a credit that came out against an established protocol on a existing registry.
We reviewed everything and went through it and set ourselves a new internal standard for what we would buy.
so no, we do that …”
Stacey Kauk says immature measurement and verification blocks new carbon buyers
“I think this is the biggest holdback, I think, to getting more buyers into the carbon removal market is the infancy of the MRV for these new approaches.”
Stacey Kauk says mainstream buyers are five years away from carbon removal
“Like, there's a lot of credit buyers out there who are sitting on the sidelines waiting for these MRV approaches to get
Tested, proven, increased data sets so that things are statistically significant,
and then they're going to be like, okay, well, the risk is…”
Stacey Kauk argues carbon removal pilot failures should be viewed as progress
“We're going to see things that don't work out in the next little while, and there's going to be stories about carbon removal projects that failed, and I don't think that these should be held up as a reason not to do carbon removal.
They should be held up as pr…”